The Macroeconomic and Welfare Benefits of Building Resilience in Disaster-Prone Developing Countries

Yehenew Endegnanew, Rafael Goncalves, Samuel Mann, Marina Mendes Tavares and Harold Zavarce

No 2025/013, IMF Working Papers from International Monetary Fund

Abstract: Natural disasters often have high economic costs, setting back years of investment in developing countries. This paper develops a multi-sector DSGE model to study the macroeconomic and welfare implications of financing resilience-building using different fiscal instruments. The model includes developing countries’ macroeconomic and distributional features, such as a large unproductive rural sector, an incomplete credit market, and an informal sector. The results indicate that investing in resilience capital in a disaster-prone country improves welfare despite its high economic cost, but the financial instrument used to mobilize revenue matters.

Keywords: Resilient investment; natural disasters; macroeconomics; fiscal sustainability.; implications of financing resilience-building; resilient capital; welfare implication; revenue matter; credit market; Human capital; Consumption; Energy sector; Global (search for similar items in EconPapers)
Pages: 46
Date: 2025-01-17
New Economics Papers: this item is included in nep-dge
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=560543 (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:2025/013

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 ().