Extreme Weather Events and Local Fiscal Responses: Evidence from U.S. Counties

Qing Miao (), Michael Abrigo, Yilin Hou () and Yanjun Liao
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Qing Miao: Rochester Institute of Technology
Yilin Hou: Syracuse University

Economics of Disasters and Climate Change, 2023, vol. 7, issue 1, No 3, 93-115

Abstract: Abstract This paper examines the impacts of floods and hurricanes on U.S. county government finances. Using a novel event study model that allows for heterogeneous treatment effects, we find that a flood or hurricane presidential disaster declaration (PDD) lowers tax revenue but increases government spending and intergovernmental revenues. Compared to flooding, hurricanes result in much larger repercussions on both revenues and borrowing. Our results also suggest disparate patterns of disaster-induced long-run fiscal impacts in counties with different socioeconomic conditions. Counties with lower incomes or greater social vulnerability tend to experience tax revenue losses and engage in more borrowing after a PDD, whereas higher-income counties see increased tax revenues and spending and also receive more intergovernmental transfers than their poorer counterparts.

Keywords: Natural disasters; Extreme weather events; Public finance; Event study model; Local governments (search for similar items in EconPapers)
JEL-codes: H71 H72 H74 Q54 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s41885-022-00120-y

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