{
  "title": "Fiscal Impacts of Climate Disasters in Emerging Markets and Developing Economies",
  "publication": "IMF Working Papers, December 15, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2023/12/15/fiscal-impacts-of-climate-disasters-in-emerging-markets-and-developing-economies-542408",
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  "summary": "Climate-induced disasters are causing increasingly frequent and intense economic damages, disproportionally affecting emerging markets and developing economies (EMDEs) relative to advanced economies (AEs).",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Research analyzes macro-fiscal implications of three common climate disasters: droughts, storms, and floods.\n- Study combines macroeconomic data with comprehensive ground and satellite disaster indicators spanning the past three decades across 164 countries.\n- Focus on differential effects between emerging markets and developing economies (EMDEs) and advanced economies (AEs)."
    },
    {
      "heading": "Key empirical findings",
      "content": "- Droughts in EMDEs:\n  - Reduce output growth by 1.4 percentage points.\n  - Reduce government revenue by 0.7 percent of GDP.\n  - Fiscal expenditure does not increase following a drought, likely reflecting limited fiscal space.\n- Storms in EMDEs:\n  - Drag output growth.\n  - Have negligible impact on fiscal revenue.\n  - Government expenditure increases due to reconstruction and clean-up efforts.\n- Floods:\n  - Localized floods show only limited impact on growth and fiscal positions in EMDEs.\n- Advanced economies (AEs):\n  - Tend to experience negligible growth and fiscal consequences from climate-induced shocks."
    },
    {
      "heading": "Fiscal mechanisms and interpretation",
      "content": "- Droughts erode tax bases in EMDEs where agriculture tends to be the principal sector, translating into lower government revenue.\n- Limited fiscal response after droughts suggests constrained fiscal space and weaker ability to increase spending in response to agricultural shocks.\n- Storm-related increases in government expenditure reflect reconstruction and clean-up demands even when revenue effects are negligible.\n- Differential impacts between EMDEs and AEs underscore structural and fiscal capacity differences."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Strengthen disaster preparedness and climate change adaptation in EMDEs to mitigate disproportionate macro-fiscal damages.\n- Increase international support targeted to disaster preparedness and climate change adaptation for EMDEs, given the more detrimental effects of climate shocks in these countries.\n- Prioritize policies that protect tax bases and enhance fiscal space to enable effective post-disaster fiscal responses, particularly in agriculture-dependent EMDEs."
    },
    {
      "heading": "Research scope and data notes",
      "content": "- Analysis covers droughts, storms, and floods over the past three decades across 164 countries using macroeconomic, ground, and satellite disaster indicators.\n- Identified subject themes include Environment, Expenditure, Fiscal policy, Fiscal space, Fiscal stance, Natural disasters, Public debt.\n\nIMF Working Paper: Fiscal Impacts of Climate Disasters in Emerging Markets and Developing Economies\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2023/12/15/fiscal-impacts-of-climate-disasters-in-emerging-markets-and-developing-economies-542408"
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    "Authors: Habtamu Fuje, Jiaxiong Yao, Seung Mo Choi, Hamza Mighri",
    "Published: December 15, 2023",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400262913.001",
    "Research analyzes macro-fiscal implications of three common climate disasters: droughts, storms, and floods.",
    "Study combines macroeconomic data with comprehensive ground and satellite disaster indicators spanning the past three decades across 164 countries.",
    "Focus on differential effects between emerging markets and developing economies (EMDEs) and advanced economies (AEs).",
    "Droughts in EMDEs:",
    "Storms in EMDEs:",
    "Floods:",
    "Advanced economies (AEs):",
    "Droughts erode tax bases in EMDEs where agriculture tends to be the principal sector, translating into lower government revenue.",
    "Limited fiscal response after droughts suggests constrained fiscal space and weaker ability to increase spending in response to agricultural shocks.",
    "Storm-related increases in government expenditure reflect reconstruction and clean-up demands even when revenue effects are negligible.",
    "Differential impacts between EMDEs and AEs underscore structural and fiscal capacity differences.",
    "Strengthen disaster preparedness and climate change adaptation in EMDEs to mitigate disproportionate macro-fiscal damages.",
    "Increase international support targeted to disaster preparedness and climate change adaptation for EMDEs, given the more detrimental effects of climate shocks in these countries.",
    "Prioritize policies that protect tax bases and enhance fiscal space to enable effective post-disaster fiscal responses, particularly in agriculture-dependent EMDEs.",
    "Analysis covers droughts, storms, and floods over the past three decades across 164 countries using macroeconomic, ground, and satellite disaster indicators.",
    "Identified subject themes include Environment, Expenditure, Fiscal policy, Fiscal space, Fiscal stance, Natural disasters, Public debt.",
    "**Working Paper**"
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