## Understanding the Macroeconomic Effects of Natural Disasters

_IMF Working Papers, February 21, 2025_

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## Bibliographic details
- Authors: Ha Nguyen, Alan Feng, Mercedes Garcia-Escribano
- Published: February 21, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229001939.001

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### Summary findings
- Climate change is causing more frequent and devastating natural disasters.
- The paper has two main goals:
  - Examine the dynamic effects of natural disasters on the growth of output and its components.
  - Assess the role of pre-existing country characteristics in mitigating the adverse impact of natural disasters.

### Dynamic effects on output and its components
- Advanced economies (AEs):
  - Government expenditure rises immediately in the same year of the natural disaster.
  - The rise in government expenditure offsets the decline in private investment growth.
  - As a result, output growth in AEs is not significantly affected by natural disasters.
- Emerging markets and developing countries (EMDEs):
  - The increase in government expenditure after a natural disaster is smaller than in AEs.
  - The smaller fiscal response is unable to mitigate the contemporaneous negative effect on output growth.
  - The contemporaneous decline in output growth mainly reflects:
    - A fall in investment in non-small-island EMDEs.
    - A fall in net exports in small-island EMDEs.
  - Output recovery in the subsequent year does not fully offset the decline during the year of the disaster.

### Role of pre-existing country characteristics
- Small islands tend to experience more significant declines in output growth following a natural disaster.
- Countries with limited pre-disaster fiscal space tend to experience more significant declines in output growth following a natural disaster.

### Key publication metadata (selected)
- Authors: Ha Nguyen, Alan Feng, Mercedes Garcia-Escribano
- Date: February 21, 2025
- Pages: 27
- Series: Working Paper No. 2025/046
- Issue: 046
- DOI: https://doi.org/10.5089/9798229001939.001
- ISBN: 9798229001939
- ISSN: 1018-5941

*Source: https://www.imf.org/en/publications/wp/issues/2025/02/21/understanding-the-macroeconomic-effects-of-natural-disasters-562165*

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_Source: https://www.imf.org/en/publications/wp/issues/2025/02/21/understanding-the-macroeconomic-effects-of-natural-disasters-562165_