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The Fiscal Consequences of Natural Disasters: Evidence from the U.S. States

Author

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  • Omer Bayar
  • Todd Richard Yarbrough

Abstract

The paper investigates the fiscal impact of natural disasters in the U.S. states. The focus is on state spending, state revenues, and federal transfers for the period from 1970 to 2015. Results show that a broad definition based on dollar damages from all emergency events and major disasters has a small effect on state-level fiscal conditions, which stands in contrast to prior studies. On the other hand, a narrower definition based on the occurrence of major disasters is associated with increased spending and transfers alongside spending effects that grow with disaster severity.

Suggested Citation

  • Omer Bayar & Todd Richard Yarbrough, 2024. "The Fiscal Consequences of Natural Disasters: Evidence from the U.S. States," Public Finance Review, , vol. 52(2), pages 222-252, March.
    • Handle: RePEc:sae:pubfin:v:52:y:2024:i:2:p:222-252
    DOI: 10.1177/10911421231179535
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    References listed on IDEAS

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    1. Qing Miao & Yu Shi & Meri Davlasheridze, 2021. "Fiscal Decentralization and Natural Disaster Mitigation: Evidence from the United States," Public Budgeting & Finance, Wiley Blackwell, vol. 41(1), pages 26-50, March.
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    3. W. J. Wouter Botzen & Howard Kunreuther & Jeffrey Czajkowski & Hans de Moel, 2019. "Adoption of Individual Flood Damage Mitigation Measures in New York City: An Extension of Protection Motivation Theory," Risk Analysis, John Wiley & Sons, vol. 39(10), pages 2143-2159, October.
    4. Yilin Hou, 2013. "State Government Budget Stabilization," Studies in Public Choice, Springer, edition 127, number 978-1-4614-6061-9, March.
    5. Wagner, Gary A., 2003. "Are state budget stabilization funds only the illusion of savings?: Evidence from stationary panel data," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(2), pages 213-238.
    6. Raddatz, Claudio, 2007. "Are external shocks responsible for the instability of output in low-income countries?," Journal of Development Economics, Elsevier, vol. 84(1), pages 155-187, September.
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    Keywords

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    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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