Fiscal storms: public spending and revenues in the aftermath of natural disasters
AbstractRecent research in both the social and natural sciences has been devoted to increasing our ability to predict disasters, prepare for them and mitigate their costs. Curiously, we appear to know very little about the fiscal consequences of disasters. The likely fiscal impact of a natural disaster has not been examined before in any comparable or comparative framework. We estimate and quantify the fiscal consequences of natural disasters using quarterly fiscal and disaster data for a large panel of countries. In our estimations, we employ a panel VAR framework that is similar to Burnside et al. (Journal of Economic Theory, 2004), that also controls for the business cycle. We find fiscal behavior in the aftermath of disasters in developed countries that can best be characterized as counter-cyclical. In contrast, we find pro-cyclical decreased spending and increasing revenues in developing countries following large natural disasters. We quantify these effects.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Environment and Development Economics.
Volume (Year): 16 (2011)
Issue (Month): 01 (February)
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Other versions of this item:
- Ilan Noy & Aekkanush Nualsri, 2008. "Fiscal Storms: Public Spending and Revenues in the Aftermath of Natural Disasters," Working Papers 200809, University of Hawaii at Manoa, Department of Economics.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
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- Eduardo Cavallo & Ilan Noy, 2010. "The Aftermath of Natural Disasters: Beyond Destruction," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 11(2), pages 25-35, 07.
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- Eduardo Cavallo & Ilan Noy, 2009.
"The Economics of Natural Disasters - A Survey,"
200919, University of Hawaii at Manoa, Department of Economics.
- Eduardo Cavallo & Ilan Noy, 2009. "The Economics of Natural Disasters: A Survey," Research Department Publications 4649, Inter-American Development Bank, Research Department.
- Eduardo A. Cavallo & Ilan Noy, 2009. "The Economics of Natural Disasters: A Survey," IDB Publications 6779, Inter-American Development Bank.
- Makena Coffman & Ilan Noy, 2009. "In the Eye of the Storm: Coping with Future Natural Disasters in Hawaii," Working Papers 200904, University of Hawaii at Manoa, Department of Economics.
- Ilan Noy & Tam Bang Vu, 2009.
"The Economics of Natural Disasters in a Developing Country: The Case of Vietnam,"
200903, University of Hawaii at Manoa, Department of Economics.
- Noy, Ilan & Vu, Tam Bang, 2010. "The economics of natural disasters in a developing country: The case of Vietnam," Journal of Asian Economics, Elsevier, vol. 21(4), pages 345-354, August.
- Noy, Ilan, 2012.
"Natural disasters and economic policy for the Pacific Rim,"
Working Paper Series
2088, Victoria University of Wellington, School of Economics and Finance.
- Ilan Noy, 2012. "Natural Disasters and Economic Policy for the Pacific Rim," Working Papers 201201, University of Hawaii at Manoa, Department of Economics.
- Kousky, Carolyn, 2012. "Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options," Discussion Papers dp-12-28, Resources For the Future.
- Makena Coffman & Ilan Noy, 2009. "A Hurricane’s Long-Term Economic Impact: the Case of Hawaii’s Iniki," Working Papers 200905, University of Hawaii at Manoa, Department of Economics.
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