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Unmitigated disasters? New evidence on the macroeconomic cost of natural catastrophes

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Author Info

  • Goetz von Peter
  • Sebastian von Dahlen
  • Sweta C Saxena

Abstract

This paper presents a large panel study on the macroeconomic consequences of natural catastrophes and analyzes the extent to which risk transfer to insurance markets facilitates economic recovery. Our main results are that major natural catastrophes have large and signi cant negative e ects on economic activity, both on impact and over the longer run. However, it is mainly the uninsured losses that drive the subsequent macroeconomic cost, whereas sufficiently insured events are inconsequential in terms of foregone output. This result helps to disentangle conicting ndings in the literature, and puts the focus on risk transfer mechanisms to help mitigate the macroeconomic costs of natural catastrophes.

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Bibliographic Info

Paper provided by Bank for International Settlements in its series BIS Working Papers with number 394.

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Length: 38 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:bis:biswps:394

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Related research

Keywords: natural catastrophes; disasters; economic growth; insurance; risk transfer; reinsurance; recovery; development;

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References

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  1. Suresh De Mel & David McKenzie & Christopher Woodruff, 2012. "Enterprise Recovery Following Natural Disasters," Economic Journal, Royal Economic Society, vol. 122(559), pages 64-91, 03.
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  17. J. David Cummins & Olivier Mahul, 2009. "Catastrophe Risk Financing in Developing Countries : Principles for Public Intervention," World Bank Publications, The World Bank, number 6289.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Insure better against natural disasters
    by Economic Logician in Economic Logic on 2013-01-18 15:46:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Céline Grislain-Letremy, 2013. "Natural Disters : Exposure and Underinsurance," Working Papers 2013-15, Centre de Recherche en Economie et Statistique.
  2. Sebastian von Dahlen & Goetz von Peter, 2012. "Natural catastrohpes and global reinsurance - exploring the linkages," BIS Quarterly Review, Bank for International Settlements, December.
  3. C. Grislain-Letrémy, 2013. "Natural Disasters: Exposure and Underinsurance," Documents de Travail de la DESE - Working Papers of the DESE g2013-12, Institut National de la Statistique et des Etudes Economiques, DESE.
  4. Grislain-Letrémy, Céline, 2013. "Natural Disasters: Exposure and Underinsurance," Economics Papers from University Paris Dauphine 123456789/13276, Paris Dauphine University.

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