The Role of Transfer Payments in Mitigating Shocks: Evidence From the Impact of Hurricanes

Tatyana Deryugina

MPRA Paper from University Library of Munich, Germany

Abstract: Little is known about how aggregate economic shocks are mitigated by social safety nets. I use hurricanes as an exogenous shock to the economics of US counties and show that non-disaster government transfers, such as unemployment insurance and public medical spending, increase substantially in the decade after landfall. Indeed, I estimate that the net present value of the increase in non-disaster transfers is more than double that of direct disaster aid. Among the implications of these findings are that the fiscal costs of natural disasters are much larger than previously thought and that existing social safety net programs help to mitigate the effects of macroeconomic shocks.

Keywords: Mitigation; Macroeconomic Shock; Transfer Payments (search for similar items in EconPapers)
JEL-codes: H5 H53 H8 H84 Q5 Q54 (search for similar items in EconPapers)
Date: 2011-05, Revised 2013-08-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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