Building resilience has become a key topic under the FCDO-IMF partnership on research on the macroeconomics of low-income countries (LICs). As we know, in addition to the ongoing COVID-19 pandemic, LICs face a number of challenges that keep them from growing in a sustained manner, including natural disasters; dealing with the effects of climate change; and managing large outflows and inflow of labor due to various developments (such as conflicts). Under this topic, we plan an extensive effort to understand how countries can build resilience in the face of such developments. What follows is a brief description of the progress made in phase 2, 3 and 4 of the FCDO-IMF partnership.
Under phase 2 (April 2015 to March 2017), the work under the theme of building resilience started in the last year of phase 2. The work focused on producing new research on optimal macroeconomic policies to help LICs enhance resilience to the effects of climate change and natural disasters. Some of the achievements during the last year of phase 2 include: a research paper on Investing to Mitigate and Adapt to Climate Change: A Framework Model and a policy paper on Small States' Resilience to Natural Disasters and Climate Change - Role for the IMF. For a list of all the work produced under phase 2, see the report for year 5 of the FCDO-IMF partnership.
Under phase 3 (April 2017 to March 2020), the project focused on the extensions of the Debt, Investment and Growth (DIG) models, integrated assessment models (IAMs), and heterogeneous agents’ macroeconomic and distributional analysis models (MDAMs) to incorporate features that capture the main channels through which natural disasters and climate change affect LICs. In the case of natural disasters, the new models can help prioritize areas of risk mitigation as well as suggest ways of organizing and financing post-disaster recovery. On climate change, the new models shed some light on short-run macroeconomic and growth implications of adaptation as well as distributional impact of currently-advocated major policies, namely, cap and trade, carbon tax, and phasing in of renewable energy for mitigating climate change. Some of the achievements under phase 3 include a paper on Building Resilience to Natural Disasters: An Application to Small Developing States and another paper on Emissions and Growth: Trends and Cycles in a Globalized World. It also includes a policy paper on Building Resilience in Developing Countries Vulnerable to Large Natural Disasters. For a list of all the work produced under phase 3, see the report for year 6, year 7, and year 8 of the FCDO-IMF partnership.
Under the current phase—phase 4 (April 2020 to March 2025), one area of work will look into the macro criticality of climate-change-related natural disaster shocks, including the pandemic situation like the one of COVID-19. The economic consequences of severe epidemics and similar health-related shocks will be examined empirically. A separate work will look into revisiting industry diversification and sector vulnerability upon natural disaster shocks. And another work will look into integrated assessment on long-run impacts of climate change in LICs. For a list of all the work produced under phase 4, see the upcoming reports for years 9–13.
For a list of products that have been produced under each of the four phases of the FCDO-IMF partnership, see the box on outputs on the left-hand side.
