## How do International Financial Flows to Developing Countries Respond to Natural Disasters?

_IMF Working Papers, July 1, 2010_

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## Bibliographic details
- Authors: Antonio David
- Published: July 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455201778.001

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### Summary
- Uses multivariate dynamic panel analysis to examine the response of international financial flows to natural disasters for a large sample of developing countries.
- Models point to differentiated responses across specific types of financial flows.
- Conclusions have implications for capital/financial account management policies, especially regarding liberalization of private capital flows in countries vulnerable to natural disasters.

### Key findings
- Remittance inflows increase significantly in response to shocks to both climatic and geological disasters.
- Responses of aid flows to natural disaster shocks in general tend not to be statistically significant.
- International assistance to low income countries increases following geological disaster shocks.
- Other private capital flows (bank lending and equity) typically do not attenuate the effects of disasters and, in some specifications, even amplify the negative economic effects of these events.

### Methodology
- Multivariate dynamic panel analysis applied to a large sample of developing countries.
- Models estimate responses of different categories of international financial flows to climatic and geological disaster shocks.

### Policy implications and recommendations
- Countries should take their vulnerability to natural disasters into account when considering the costs and benefits of the liberalization of private capital flows.
- Capital/financial account management policies need to consider differentiated effects across remittances, aid, and other private capital flows.

### Subjects and keywords
- Subject: Capital flows, Foreign aid, Natural disasters, Real exchange rates, Remittances
- Keywords: capital flow, exchange rate, real interest rate, WP

*Source: Antonio David. July 1, 2010.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/how-do-international-financial-flows-to-developing-countries-respond-to-natural-disasters-24050_