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Measuring the Financial Shocks of Natural Disasters: A Panel Study of U.S. States

Yilin Hou (), Qing Miao and Michael Abrigo
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Yilin Hou: Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244, https://www.maxwell.syr.edu/cpr/
Qing Miao: Center for Science, Technology, and Environmental Policy Studies, School of Public Affairs, Arizona State University

No 199, Center for Policy Research Working Papers from Center for Policy Research, Maxwell School, Syracuse University

Abstract: This paper employs panel vector autoregression to examine the dynamic fiscal response to disaster shocks. With 50-state, 1970-2013 panel data of state government finance and disaster damage, we estimate disaster impacts on revenue, expenditure, debt issuance, and intergovernmental transfers. We find that following a disaster, states increase program expenditure, but receive more federal transfers. Disasters have limited impact on total tax revenues but amplify fluctuations in sales, income, and property tax revenues. Our findings suggest that disaster-induced additional spending is largely financed through federal transfers, which include not only disaster relief funds but also non-disaster-related public welfare aids.

Keywords: Natural Disaster; Panel Vector Autoregression; Intergovernmental Transfer (search for similar items in EconPapers)
JEL-codes: H12 H30 H53 H7 Q54 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2016-12
New Economics Papers: this item is included in nep-ure
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Journal Article: Measuring the Financial Shocks of Natural Disasters: A Panel Study of U.S. States (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:max:cprwps:199

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