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Natural Disasters and Growth: The Role of Foreign Aid and Disaster Insurance

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  • Rodolfo Manuelli

    (Washington University and Federal Reserve Bank of St. Louis)

Abstract

In this paper we develop a continuous time stochastic growth model that is suitable for studying the impact of natural disasters on the short run and long run growth rate of an economy. We find that the growth effects of a natural disaster depend in complicated ways on the details of expected foreign disaster aid and the existence of catastrophe insurance markets. We show that disaster aid can delay recovery. We also show that access to catastrophe insurance can reduce investment in prevention and mitigation activities.

Suggested Citation

  • Rodolfo Manuelli, 2017. "Natural Disasters and Growth: The Role of Foreign Aid and Disaster Insurance," 2017 Meeting Papers 1118, Society for Economic Dynamics.
    • Handle: RePEc:red:sed017:1118
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    References listed on IDEAS

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    8. Solomon M. Hsiang & Amir S. Jina, 2014. "The Causal Effect of Environmental Catastrophe on Long-Run Economic Growth: Evidence From 6,700 Cyclones," NBER Working Papers 20352, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Siddhartha Sanghi, 2019. "Health Inequality: Role of Insurance and Technological Progress," 2019 Meeting Papers 703, Society for Economic Dynamics.

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