Advanced Search
MyIDEAS: Login to save this paper or follow this series

High consumption volatility : the impact of natural disasters?

Contents:

Author Info

  • Auffret, Philippe
Registered author(s):

    Abstract

    A history of repeated external and domestic shocks has made economic insecurity a major concern across the Caribbean region. Of particular concern to all households, especially the poorest segments of the population, is the exposure to shocks that are generated by catastrophic events or natural disasters. The author shows that despite high consumption growth, the Caribbean region suffers from a high volatility of consumption that decreases household welfare. After presenting some empirical evidence that consumption volatility is higher in the Caribbean region than in the rest of the world, he makes some empirically testable inferences that help explain consumption volatility. The authordevelops a conceptual framework for analyzing the effects of catastrophic events on household and aggregate welfare. According to this framework, the volatility of consumption comes from production shocks that are transformed into consumption shocks mostly because of underdeveloped or ineffective risk-management mechanisms. Auffret conducts an empirical analysis of the impact of catastrophic events on 16 countries (6 from the Caribbean region and 10 from Latin America) from 1970-99 and shows that catastrophic events lead to: 1) A substantial decline in the growth of output. 2) A substantial decline in the growth of investment. 3) A more moderate decline in consumption growth (most of the decline is in private consumption, while public consumption declines moderately. 4) A worsening of the current account of the balance of payments.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2003/02/15/000094946_03020404041019/Rendered/PDF/multi0page.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2962.

    as in new window
    Length:
    Date of creation: 31 Jan 2003
    Date of revision:
    Handle: RePEc:wbk:wbrwps:2962

    Contact details of provider:
    Postal: 1818 H Street, N.W., Washington, DC 20433
    Phone: (202) 477-1234
    Email:
    Web page: http://www.worldbank.org/
    More information through EDIRC

    Related research

    Keywords: Economic Theory&Research; Financial Intermediation; Public Health Promotion; Environmental Economics&Policies; Consumption; Environmental Economics&Policies; Economic Theory&Research; Inequality; Consumption; Financial Intermediation;

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 84(3), pages 488-500, August.
    2. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 58(2), pages 277-97, April.
    3. Arellano, Manuel, 1993. "On the testing of correlated effects with panel data," Journal of Econometrics, Elsevier, Elsevier, vol. 59(1-2), pages 87-97, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Christian EBEKE & Jean-Louis COMBES, 2010. "Remittances and Household Consumption Instability in Developing Countries," Working Papers 201015, CERDI.
    2. Noy, Ilan & Karim, Azreen, 2013. "Poverty, inequality and natural disasters – A survey," Working Paper Series, Victoria University of Wellington, School of Economics and Finance 2974, Victoria University of Wellington, School of Economics and Finance.
    3. Tavares, Jose, 2004. "The open society assesses its enemies: shocks, disasters and terrorist attacks," Journal of Monetary Economics, Elsevier, Elsevier, vol. 51(5), pages 1039-1070, July.
    4. Raghbendra Jha, 2006. "Vulnerability and Natural Disasters in Fiji, Papua New Guinea, Vanuatu and the Kyrgyz Republic," Departmental Working Papers, The Australian National University, Arndt-Corden Department of Economics 2006-05, The Australian National University, Arndt-Corden Department of Economics.
    5. Heger, Martin & Julca, Alex & Paddison, Oliver, 2008. "Analysing the Impact of Natural Hazards in Small Economies: The Caribbean Case," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2008/25, World Institute for Development Economic Research (UNU-WIDER).
    6. Michele Fratianni & Heejoon Kang, 2006. "International Terrorism, International Trade, and Borders," Working Papers, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy 2006-13, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    7. Raghbendra Jha, 2006. "Vulnerability of Consumption Growth in Rural India," ASARC Working Papers, The Australian National University, Australia South Asia Research Centre 2006-04, The Australian National University, Australia South Asia Research Centre.
    8. Tobias N. Rasmussen, 2004. "Macroeconomic Implications of Natural Disasters in the Caribbean," IMF Working Papers 04/224, International Monetary Fund.
    9. Paul A. Raschky & Manijeh Schwindt, . "Aid, Catastrophes and the Samaritan's Dilemma," Working Papers, Faculty of Economics and Statistics, University of Innsbruck 2008-06, Faculty of Economics and Statistics, University of Innsbruck.
    10. Martin Gassebner & Alexander Keck & Robert Teh, 2006. "Shaken, not stirred: the impact of disasters on international trade," KOF Working papers, KOF Swiss Economic Institute, ETH Zurich 06-139, KOF Swiss Economic Institute, ETH Zurich.
    11. Ercio Muñoz S. & Alfredo Pistelli M., 2010. "¿Tienen los Terremotos un Impacto Inflacionario en el Corto Plazo? Evidencia para una Muestra de Países," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, Central Bank of Chile, vol. 13(2), pages 113-127, April.
    12. Karim, Azreen & Noy, Ilan, 2014. "Poverty and natural disasters: A meta-analysis," Working Paper Series, Victoria University of Wellington, School of Economics and Finance 3234, Victoria University of Wellington, School of Economics and Finance.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2962. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.