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Unmitigated disasters? New evidence on the macroeconomic cost of natural catastrophes

Goetz von Peter (), Sebastian von Dahlen and Sweta Saxena

No 394, BIS Working Papers from Bank for International Settlements

Abstract: This paper presents a large panel study on the macroeconomic consequences of natural catastrophes and analyzes the extent to which risk transfer to insurance markets facilitates economic recovery. Our main results are that major natural catastrophes have large and signi cant negative e ects on economic activity, both on impact and over the longer run. However, it is mainly the uninsured losses that drive the subsequent macroeconomic cost, whereas sufficiently insured events are inconsequential in terms of foregone output. This result helps to disentangle conicting ndings in the literature, and puts the focus on risk transfer mechanisms to help mitigate the macroeconomic costs of natural catastrophes.

Keywords: natural catastrophes; disasters; economic growth; insurance; risk transfer; reinsurance; recovery; development (search for similar items in EconPapers)
Pages: 38 pages
Date: 2012-12
New Economics Papers: this item is included in nep-ias and nep-rmg
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