NATURAL DISASTERS AND DEBT FINANCING COSTS

Boris Fisera, Roman Horvath and Martin Melecký
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Boris Fisera: Slovak Academy of Sciences, Bratislava, Slovakia†Institute of Economic Studies, Faculty of Social Sciences, Charles University, Czech Republic

Climate Change Economics (CCE), 2023, vol. 14, issue 03, 1-24

Abstract: Using a comprehensive dataset of 272 large-scale natural disasters in 83 countries from 1986 to 2018, we find that disasters increase government debt financing costs (T-bill rates and 10-year government bond yields) but only in the middle- and low-income countries. This distinct response relative to high-income countries is due to lower levels of credit market depth, of private insurance penetration, and of central bank independence. The results for all natural disasters are driven by biological (epidemic) and climatological disasters — two types of hazards, the frequency and severity of which have been rising.

Keywords: Natural disasters; interest rates; government (search for similar items in EconPapers)
JEL-codes: D31 O13 O15 Q33 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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DOI: 10.1142/S201000782350015X

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