Natural disasters and fiscal shelters

Álvaro Fernández-Gallardo and Evi Pappa
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Álvaro Fernández-Gallardo: BANCO DE ESPAÑA
Evi Pappa: UC3M AND CEPR

No 2612, Working Papers from Banco de España

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.

Keywords: disaster relief (FEMA); post-disaster economic recovery; fiscal preparedness; disaster mitigation (search for similar items in EconPapers)
JEL-codes: E62 H72 H84 Q54 R11 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2026-03
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2612

DOI: 10.53479/42825

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