Financing the Reconstruction of Public Capital after a Natural Disaster

When a natural disaster destroys public capital, these direct losses are exacerbated by indirect losses arising from reduced output while reconstruction takes place. These indirect losses may be much larger, relative to the direct ones, in low-inco...

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Main Authors:	Bevan, David, Adam, Christopher
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	CAPITAL LOSS PRIVATE CAPITAL STOCK DEFICIT MONETARY POLICY CAPITAL MARKETS EXTERNAL COMMERCIAL BORROWING DEVELOPMENT ASSISTANCE ACCOUNTING FOREIGN DEBT STOCK PRIVATE CAPITAL STOCKS DOMESTIC BORROWING INTEREST RATE OF RETURN INVESTMENT RATE INTEREST RATE EXCHANGE OPTION DISCOUNT RATE REAL INTEREST REVENUES BINDING CONSTRAINT BONDS INCENTIVES DISCOUNT BUDGET CONSTRAINTS CAPITAL LOSSES CAPITAL STOCK PUBLIC ASSETS TAX CENTRAL BANKS INVESTMENT PROCESS CREDITORS INTERNATIONAL BANK OUTPUT LOSSES BUDGET CHOICE LABOR MARKET POLICY RESPONSE INDEBTEDNESS COSTS COMMERCIAL BORROWING NATURAL DISASTER POLICY RESPONSES CONSTANT SHARE CONTRACTS CAPITAL FORMATION TAX EXEMPTIONS RECURRENT EXPENDITURES OPTIONS NATURAL DISASTERS DEBT MARKETS RETURN INTERNATIONAL DEVELOPMENT PUBLIC FINANCE OPEN ECONOMY DOMESTIC DEBT LOANS REAL INTEREST RATE RESERVES CAPITAL STOCKS PRIVATE CAPITAL DEBT SERVICE RECURRENT EXPENDITURE DOMESTIC BONDS FINANCE PUBLIC INVESTMENT TAXES CAPITAL SHARES INVESTMENT DECISIONS EXPENDITURE INFRASTRUCTURE INVESTMENT DEBT FINANCING INVESTORS CONSUMPTION DEBT RATIO BUDGET CONSTRAINT INTEREST PAYMENTS OPPORTUNITY COST GOOD TAX RATE GOVERNMENT BUDGET CAPITAL TRANSPARENCY ACCESS TO CAPITAL FUTURE RETURNS CAPACITY CONSTRAINTS CONTRACT GOVERNMENT REVENUE EXPENDITURES PROPERTY PROPERTIES TAX RATES SHARES OPPORTUNITY COSTS FACE VALUE INSURANCE PREMIUM REAL EXCHANGE RATE DEBT STOCKS MARKET INTERNAL RATES OF RETURN PUBLIC DEBT PRIVATE DEBT LEVY INSURANCE SOCIAL CAPITAL TAXATION DEBT MARKETS INVESTMENT RATES GOODS STOCKS INVESTMENT RATES OF RETURN BOND SHARE TAX SYSTEM REVENUE EXTERNAL DEBT INTERNAL RATE OF RETURN INVESTMENTS CONSUMER PRICE INDEX EXCHANGE RATE ASSET CLASS INSTRUMENT ARBITRAGE REMITTANCES PUBLIC SPENDING CAPITAL INVESTMENT DEVELOPMENT BANK EXTERNAL BORROWING DEVELOPMENT POLICY INVESTING
Online Access:	http://documents.worldbank.org/curated/en/2016/06/26510507/financing-reconstruction-public-capital-after-natural-disaster http://hdl.handle.net/10986/24635

id	okr-10986-24635
recordtype	oai_dc
spelling	okr-10986-246352021-04-23T14:04:23Z Financing the Reconstruction of Public Capital after a Natural Disaster Bevan, David Adam, Christopher CAPITAL LOSS PRIVATE CAPITAL STOCK DEFICIT MONETARY POLICY CAPITAL MARKETS EXTERNAL COMMERCIAL BORROWING DEVELOPMENT ASSISTANCE ACCOUNTING FOREIGN DEBT STOCK PRIVATE CAPITAL STOCKS DOMESTIC BORROWING INTEREST RATE OF RETURN INVESTMENT RATE INTEREST RATE EXCHANGE OPTION DISCOUNT RATE REAL INTEREST REVENUES BINDING CONSTRAINT BONDS INCENTIVES DISCOUNT BUDGET CONSTRAINTS CAPITAL LOSSES CAPITAL STOCK PUBLIC ASSETS TAX CENTRAL BANKS INVESTMENT PROCESS CREDITORS INTERNATIONAL BANK OUTPUT LOSSES BUDGET CHOICE LABOR MARKET POLICY RESPONSE INDEBTEDNESS COSTS COMMERCIAL BORROWING NATURAL DISASTER POLICY RESPONSES CONSTANT SHARE CONTRACTS CAPITAL FORMATION TAX EXEMPTIONS RECURRENT EXPENDITURES OPTIONS NATURAL DISASTERS DEBT MARKETS RETURN INTERNATIONAL DEVELOPMENT PUBLIC FINANCE OPEN ECONOMY DOMESTIC DEBT LOANS REAL INTEREST RATE RESERVES CAPITAL STOCKS PRIVATE CAPITAL DEBT SERVICE RECURRENT EXPENDITURE DOMESTIC BONDS FINANCE PUBLIC INVESTMENT TAXES CAPITAL SHARES INVESTMENT DECISIONS EXPENDITURE INFRASTRUCTURE INVESTMENT DEBT FINANCING INVESTORS CONSUMPTION DEBT RATIO BUDGET CONSTRAINT INTEREST PAYMENTS OPPORTUNITY COST GOOD TAX RATE GOVERNMENT BUDGET CAPITAL TRANSPARENCY ACCESS TO CAPITAL FUTURE RETURNS CAPACITY CONSTRAINTS CONTRACT GOVERNMENT REVENUE EXPENDITURES PROPERTY PROPERTIES TAX RATES SHARES OPPORTUNITY COSTS FACE VALUE INSURANCE PREMIUM REAL EXCHANGE RATE DEBT STOCKS MARKET INTERNAL RATES OF RETURN PUBLIC DEBT PRIVATE DEBT LEVY INSURANCE SOCIAL CAPITAL TAXATION DEBT MARKETS INVESTMENT RATES GOODS STOCKS INVESTMENT RATES OF RETURN BOND SHARE TAX SYSTEM REVENUE EXTERNAL DEBT INTERNAL RATE OF RETURN INVESTMENTS CONSUMER PRICE INDEX EXCHANGE RATE ASSET CLASS INSTRUMENT ARBITRAGE REMITTANCES PUBLIC SPENDING CAPITAL INVESTMENT DEVELOPMENT BANK EXTERNAL BORROWING DEVELOPMENT POLICY INVESTING When a natural disaster destroys public capital, these direct losses are exacerbated by indirect losses arising from reduced output while reconstruction takes place. These indirect losses may be much larger, relative to the direct ones, in low-income countries, because they lack the finance for rapid reconstruction. This paper uses a dynamic general equilibrium model to examine sovereign disaster risk insurance, increased taxation, and budget reallocation as alternative financing mechanisms for countries where increased borrowing is impractical. The analysis suggests that insurance may or may not be helpful, depending on detailed circumstances, and that budget reallocation is potentially very damaging. Raised taxation, if feasible, may be an attractive option. 2016-07-07T21:06:19Z 2016-07-07T21:06:19Z 2016-06 Working Paper http://documents.worldbank.org/curated/en/2016/06/26510507/financing-reconstruction-public-capital-after-natural-disaster http://hdl.handle.net/10986/24635 English en_US Policy Research Working Paper;No. 7718 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	CAPITAL LOSS PRIVATE CAPITAL STOCK DEFICIT MONETARY POLICY CAPITAL MARKETS EXTERNAL COMMERCIAL BORROWING DEVELOPMENT ASSISTANCE ACCOUNTING FOREIGN DEBT STOCK PRIVATE CAPITAL STOCKS DOMESTIC BORROWING INTEREST RATE OF RETURN INVESTMENT RATE INTEREST RATE EXCHANGE OPTION DISCOUNT RATE REAL INTEREST REVENUES BINDING CONSTRAINT BONDS INCENTIVES DISCOUNT BUDGET CONSTRAINTS CAPITAL LOSSES CAPITAL STOCK PUBLIC ASSETS TAX CENTRAL BANKS INVESTMENT PROCESS CREDITORS INTERNATIONAL BANK OUTPUT LOSSES BUDGET CHOICE LABOR MARKET POLICY RESPONSE INDEBTEDNESS COSTS COMMERCIAL BORROWING NATURAL DISASTER POLICY RESPONSES CONSTANT SHARE CONTRACTS CAPITAL FORMATION TAX EXEMPTIONS RECURRENT EXPENDITURES OPTIONS NATURAL DISASTERS DEBT MARKETS RETURN INTERNATIONAL DEVELOPMENT PUBLIC FINANCE OPEN ECONOMY DOMESTIC DEBT LOANS REAL INTEREST RATE RESERVES CAPITAL STOCKS PRIVATE CAPITAL DEBT SERVICE RECURRENT EXPENDITURE DOMESTIC BONDS FINANCE PUBLIC INVESTMENT TAXES CAPITAL SHARES INVESTMENT DECISIONS EXPENDITURE INFRASTRUCTURE INVESTMENT DEBT FINANCING INVESTORS CONSUMPTION DEBT RATIO BUDGET CONSTRAINT INTEREST PAYMENTS OPPORTUNITY COST GOOD TAX RATE GOVERNMENT BUDGET CAPITAL TRANSPARENCY ACCESS TO CAPITAL FUTURE RETURNS CAPACITY CONSTRAINTS CONTRACT GOVERNMENT REVENUE EXPENDITURES PROPERTY PROPERTIES TAX RATES SHARES OPPORTUNITY COSTS FACE VALUE INSURANCE PREMIUM REAL EXCHANGE RATE DEBT STOCKS MARKET INTERNAL RATES OF RETURN PUBLIC DEBT PRIVATE DEBT LEVY INSURANCE SOCIAL CAPITAL TAXATION DEBT MARKETS INVESTMENT RATES GOODS STOCKS INVESTMENT RATES OF RETURN BOND SHARE TAX SYSTEM REVENUE EXTERNAL DEBT INTERNAL RATE OF RETURN INVESTMENTS CONSUMER PRICE INDEX EXCHANGE RATE ASSET CLASS INSTRUMENT ARBITRAGE REMITTANCES PUBLIC SPENDING CAPITAL INVESTMENT DEVELOPMENT BANK EXTERNAL BORROWING DEVELOPMENT POLICY INVESTING
spellingShingle	CAPITAL LOSS PRIVATE CAPITAL STOCK DEFICIT MONETARY POLICY CAPITAL MARKETS EXTERNAL COMMERCIAL BORROWING DEVELOPMENT ASSISTANCE ACCOUNTING FOREIGN DEBT STOCK PRIVATE CAPITAL STOCKS DOMESTIC BORROWING INTEREST RATE OF RETURN INVESTMENT RATE INTEREST RATE EXCHANGE OPTION DISCOUNT RATE REAL INTEREST REVENUES BINDING CONSTRAINT BONDS INCENTIVES DISCOUNT BUDGET CONSTRAINTS CAPITAL LOSSES CAPITAL STOCK PUBLIC ASSETS TAX CENTRAL BANKS INVESTMENT PROCESS CREDITORS INTERNATIONAL BANK OUTPUT LOSSES BUDGET CHOICE LABOR MARKET POLICY RESPONSE INDEBTEDNESS COSTS COMMERCIAL BORROWING NATURAL DISASTER POLICY RESPONSES CONSTANT SHARE CONTRACTS CAPITAL FORMATION TAX EXEMPTIONS RECURRENT EXPENDITURES OPTIONS NATURAL DISASTERS DEBT MARKETS RETURN INTERNATIONAL DEVELOPMENT PUBLIC FINANCE OPEN ECONOMY DOMESTIC DEBT LOANS REAL INTEREST RATE RESERVES CAPITAL STOCKS PRIVATE CAPITAL DEBT SERVICE RECURRENT EXPENDITURE DOMESTIC BONDS FINANCE PUBLIC INVESTMENT TAXES CAPITAL SHARES INVESTMENT DECISIONS EXPENDITURE INFRASTRUCTURE INVESTMENT DEBT FINANCING INVESTORS CONSUMPTION DEBT RATIO BUDGET CONSTRAINT INTEREST PAYMENTS OPPORTUNITY COST GOOD TAX RATE GOVERNMENT BUDGET CAPITAL TRANSPARENCY ACCESS TO CAPITAL FUTURE RETURNS CAPACITY CONSTRAINTS CONTRACT GOVERNMENT REVENUE EXPENDITURES PROPERTY PROPERTIES TAX RATES SHARES OPPORTUNITY COSTS FACE VALUE INSURANCE PREMIUM REAL EXCHANGE RATE DEBT STOCKS MARKET INTERNAL RATES OF RETURN PUBLIC DEBT PRIVATE DEBT LEVY INSURANCE SOCIAL CAPITAL TAXATION DEBT MARKETS INVESTMENT RATES GOODS STOCKS INVESTMENT RATES OF RETURN BOND SHARE TAX SYSTEM REVENUE EXTERNAL DEBT INTERNAL RATE OF RETURN INVESTMENTS CONSUMER PRICE INDEX EXCHANGE RATE ASSET CLASS INSTRUMENT ARBITRAGE REMITTANCES PUBLIC SPENDING CAPITAL INVESTMENT DEVELOPMENT BANK EXTERNAL BORROWING DEVELOPMENT POLICY INVESTING Bevan, David Adam, Christopher Financing the Reconstruction of Public Capital after a Natural Disaster
relation	Policy Research Working Paper;No. 7718
description	When a natural disaster destroys public capital, these direct losses are exacerbated by indirect losses arising from reduced output while reconstruction takes place. These indirect losses may be much larger, relative to the direct ones, in low-income countries, because they lack the finance for rapid reconstruction. This paper uses a dynamic general equilibrium model to examine sovereign disaster risk insurance, increased taxation, and budget reallocation as alternative financing mechanisms for countries where increased borrowing is impractical. The analysis suggests that insurance may or may not be helpful, depending on detailed circumstances, and that budget reallocation is potentially very damaging. Raised taxation, if feasible, may be an attractive option.
format	Working Paper
author	Bevan, David Adam, Christopher
author_facet	Bevan, David Adam, Christopher
author_sort	Bevan, David
title	Financing the Reconstruction of Public Capital after a Natural Disaster
title_short	Financing the Reconstruction of Public Capital after a Natural Disaster
title_full	Financing the Reconstruction of Public Capital after a Natural Disaster
title_fullStr	Financing the Reconstruction of Public Capital after a Natural Disaster
title_full_unstemmed	Financing the Reconstruction of Public Capital after a Natural Disaster
title_sort	financing the reconstruction of public capital after a natural disaster
publisher	World Bank, Washington, DC
publishDate	2016
url	http://documents.worldbank.org/curated/en/2016/06/26510507/financing-reconstruction-public-capital-after-natural-disaster http://hdl.handle.net/10986/24635
_version_	1764457241065291776

Financing the Reconstruction of Public Capital after a Natural Disaster

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