How do International Financial Flows to Developing Countries Respond to Natural Disasters?
AbstractThis paper uses multivariate dynamic panel analysis to examine the response of international financial flows to natural disasters. The models estimated for a large sample of developing countries point to differentiated responses of specific types of financial flows. The results show that remittance inflows increase significantly in response to shocks to both climatic and geological disasters, thus confirming their compensatory nature. The models suggest a nuanced role for foreign aid. While the responses of aid flows to natural disaster shocks in general tend not to be statistically significant, international assistance to low income countries increases following geological disaster shocks. Furthermore, the results show that typically, other private capital flows (bank lending and equity) do not attenuate the effects of disasters and in some specifications, even amplify the negative economic effects of these events.
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Bibliographic InfoArticle provided by De Gruyter in its journal Global Economy Journal.
Volume (Year): 11 (2011)
Issue (Month): 4 (December)
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Web page: http://www.degruyter.com
Other versions of this item:
- Antonio David, 2010. "How Do International Financial Flows to Developing Countries Respond to Natural Disasters?," IMF Working Papers 10/166, International Monetary Fund.
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