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Natural disasters and fiscal shelters

Author

Listed:
  • Álvaro Fernández-Gallardo

    (BANCO DE ESPAÑA)

  • Evi Pappa

    (UC3M AND CEPR)

Abstract

Using a novel dataset on U.S. natural disasters and high-frequency measures of economic activity, we evaluate the effectiveness of federal disaster assistance. Exploiting quasi-random variation in whether aid from the Federal Emergency Management Agency is granted or denied, we compare otherwise similar events. States receiving aid recover within 20 weeks, whereas denied states face deeper and more persistent contractions. Recovery is stronger when aid is timely and generous, and includes direct transfers. Pre-disaster mitigation lowers future disaster frequency and costs, while stronger fiscal capacity enhances resilience by enabling governments to sustain post-disaster recovery.

Suggested Citation

  • Álvaro Fernández-Gallardo & Evi Pappa, 2026. "Natural disasters and fiscal shelters," Working Papers 2612, Banco de España.
    • Handle: RePEc:bde:wpaper:2612
    DOI: https://doi.org/10.53479/42825
    as

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    File URL: https://www.bde.es/f/webbe/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/26/Files/dt2612e.pdf
    File Function: First version, March 2026
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    More about this item

    Keywords

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    JEL classification:

    • 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
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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