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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Bibliographic Details
Main Author: Cantelmo, Alessandro
Other Authors: Melina, Giovanni, Papageorgiou, Chris
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2019.
Series:IMF Working Papers; Working Paper ; No. 2019/217
Online Access:Full text available on IMF
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100 1 |a Cantelmo, Alessandro. 
245 1 0 |a Macroeconomic Outcomes in Disaster-Prone Countries /  |c Alessandro Cantelmo, Giovanni Melina, Chris Papageorgiou. 
264 1 |a Washington, D.C. :  |b International Monetary Fund,  |c 2019. 
300 |a 1 online resource (52 pages) 
490 1 |a IMF Working Papers 
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500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
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520 3 |a 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. 
538 |a Mode of access: Internet 
700 1 |a Melina, Giovanni. 
700 1 |a Papageorgiou, Chris. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2019/217 
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