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Household Finance after a Natural Disaster: The Case of Hurricane Katrina

Justin Gallagher and Daniel Hartley ()

American Economic Journal: Economic Policy, 2017, vol. 9, issue 3, 199-228

Abstract: Little is known about how affected residents are able to cope with the financial shock of a natural disaster. This paper investigates the impact of flooding on household finance. Spikes in credit card borrowing and overall delinquency rates for the most flooded residents are modest in size and short-lived. Greater flooding results in larger reductions in total debt. Lower debt levels are driven by homeowners using flood insurance to repay their mortgages rather than to rebuild. Mortgage reductions are larger in areas where reconstruction costs exceeded pre-Katrina home values and where mortgages were likely to be originated by nonlocal lenders.

JEL-codes: D14 G21 G22 Q54 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/pol.20140273
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Working Paper: Household Finance after a Natural Disaster: The Case of Hurricane Katrina (2014)
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Handle: RePEc:aea:aejpol:v:9:y:2017:i:3:p:199-228