Macroeconomic Outcomes in Disaster-Prone Countries /

Using a dynamic stochastic general equilibrium model, we study the channels through which natural disaster shocks affect macroeconomic outcomes and welfare in disaster-prone countries. We solve the model using Taylor projection, a solution method that is shown to deal effectively with high-impact we...

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Hlavní autor: Cantelmo, Alessandro
Další autoři: Melina, Giovanni, Papageorgiou, Chris
Médium: Časopis
Jazyk:English
Vydáno: Washington, D.C. : International Monetary Fund, 2019.
Edice:IMF Working Papers; Working Paper ; No. 2019/217
On-line přístup:Full text available on IMF
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Shrnutí:Using a dynamic stochastic general equilibrium model, we study the channels through which natural disaster shocks affect macroeconomic outcomes and welfare in disaster-prone countries. We solve the model using Taylor projection, a solution method that is shown to deal effectively with high-impact weather shocks calibrated in accordance to empirical evidence. We find large and persistent effects of weather shocks that significantly impact the income convergence path of disaster-prone countries. Relative to non-disaster-prone countries, on average, these shocks cause a welfare loss equivalent to a permanent fall in consumption of 1.6 percent. Welfare gains to countries that self-finance investments in resilient public infrastructure are found to be negligible, and international aid has to be sizable to achieve significant welfare gains. In addition, it is more cost-effective for donors to contribute to the financing of resilience before the realization of disasters, rather than disbursing aid after their realization.
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Fyzický popis:1 online resource (52 pages)
Médium:Mode of access: Internet
ISSN:1018-5941
Přístup:Electronic access restricted to authorized BRAC University faculty, staff and students