EconPapers    
Economics at your fingertips  
 

Macroeconomic Outcomes in Disaster-Prone Countries

Chris Papageorgiou (), Giovanni Melina () and Alessandro Cantelmo ()

No 2019/217, IMF Working Papers from International Monetary Fund

Abstract: Using a dynamic stochastic general equilibrium model, we study the channels through which natural disaster shocks affect macroeconomic outcomes and welfare in disaster-prone countries. We solve the model using Taylor projection, a solution method that is shown to deal effectively with high-impact weather shocks calibrated in accordance to empirical evidence. We find large and persistent effects of weather shocks that significantly impact the income convergence path of disaster-prone countries. Relative to non-disaster-prone countries, on average, these shocks cause a welfare loss equivalent to a permanent fall in consumption of 1.6 percent. Welfare gains to countries that self-finance investments in resilient public infrastructure are found to be negligible, and international aid has to be sizable to achieve significant welfare gains. In addition, it is more cost-effective for donors to contribute to the financing of resilience before the realization of disasters, rather than disbursing aid after their realization.

Keywords: WP; depreciation rate; math display; natural disasters; climate change; DSGE; resilient capital; international aid; welfare loss; disaster-prone country; country group; net export; countries vis-à-vis; percentage terms; Consumption; Private investment; Pacific Islands; Global; Central Africa; Caribbean (search for similar items in EconPapers)
Pages: 52
Date: 2019-10-11
New Economics Papers: this item is included in nep-dge and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=48704 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2019/217

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().

 
Page updated 2022-01-16
Handle: RePEc:imf:imfwpa:2019/217