The Macro-Fiscal Aftermath of Weather-Related Disasters: Do Loss Dimensions Matter?

November 8, 2017

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Format: Chicago

. Kerstin Gerling The Macro-Fiscal Aftermath of Weather-Related Disasters: Do Loss Dimensions Matter?, (USA: International Monetary Fund, 2017) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Weather-related natural disasters and climate change pose interrelated macro-fiscal challenges. Using panel-VARX studies for a sample of 19 countries in Developing Asia during 1970 to 2015, this paper contributes new empirical evidence on the dynamic adjustment path of growth and key fiscal variables after severe weather-related disasters. It does not only show that output loss can be permanent, but even twice as large for cases of severe casualties or material damages than people affected. Meanwhile, key fiscal aggregates remain surprisingly stable. Event and case studies suggest that this can reflect both a deliberate policy choice or binding constraints. The latter can make governments respond through mitigating fiscal policy efforts such as ad hoc fiscal rebalancing and reprioritization. The findings help better customize disaster preparedness and mitigation efforts to countries’ risk exposure along a particular loss dimension.

Subject: Environment, Fiscal policy, Fiscal stance, Natural disasters, Public debt, Revenue administration

Keywords: Capital expenditure, Climate change, Das country, Demand management, Disaster risk, Fiscal policy, Fiscal policy response, Fiscal stance, Global, Government effectiveness, Growth, Loss dimension, Loss intensity threshold, Loss measure, Loss threshold, Material loss, Natural disasters, Private sector, Weather-related natural disasters, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/235
Stock No:

WPIEA2017235
ISBN:

9781484326633
ISSN:

1018-5941

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