How Do Governments Respond after Catastrophes? Natural-Disaster Shocks and the Fiscal Stance

Natural disasters could constitute a major shock to public finances and debt sustainability because of their impact on output and the need for reconstruction and relief expenses. This paper uses a panel vector autoregressive model to systematically...

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Bibliographic Details
Main Authors: Melecky, Martin, Raddatz, Claudio
Format: Policy Research Working Paper
Language:English
Published: 2012
Subjects:
CD
GDP
LLC
TAX
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110207134355
http://hdl.handle.net/10986/3331
id okr-10986-3331
recordtype oai_dc
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ACCESS TO CAPITAL
ACCESS TO CREDIT
ACCESS TO DEBT MARKETS
ACCESS TO FUNDS
ACCIDENTS
AUTOREGRESSION
BANK POLICY
BIASES
BORROWING
BUDGET CONSTRAINT
BUDGET DEFICIT
BUDGET DEFICITS
BUSINESS CYCLE
CAPITAL MARKETS
CAPITAL STOCK
CASH PAYMENTS
CD
CREDIT CONSTRAINT
CREDITS
DAMAGES
DEBT
DEBT BURDEN
DEBT BURDENS
DEBT INSTRUMENTS
DEBT LEVEL
DEBT LEVELS
DEFICIT FINANCING
DEFICITS
DEPOSIT
DEPOSIT INTEREST
DEVELOPING COUNTRIES
DEVELOPMENT BANK
DEVELOPMENT ECONOMICS
DEVELOPMENT POLICY
DISASTER MITIGATION
DISASTER MITIGATION MEASURES
DISASTER REDUCTION
DISASTER RELIEF
DISASTER RESPONSE
DISASTER RISK
DOMESTIC DEBT
DROUGHTS
EARTHQUAKES
ECONOMETRIC ANALYSIS
ECONOMETRICS
ECONOMIC ACTIVITY
ECONOMIC DEVELOPMENT
EMERGENCY RELIEF
ENDOGENOUS VARIABLES
EXCHANGE RATE
EXOGENOUS VARIABLES
EXPENDITURE
EXPORTS
EXTERNAL SHOCKS
FAMINES
FINANCIAL COSTS
FINANCIAL DEVELOPMENT
FINANCIAL INSTRUMENTS
FINANCIAL MARKET
FINANCIAL PRODUCTS
FINANCIAL RESOURCES
FINANCIAL RISKS
FINANCIAL SUPPORT
FINANCIAL SYSTEM
FISCAL BURDENS
FISCAL DEFICIT
FISCAL EFFORT
FISCAL POLICY
FISCAL RESOURCES
FLOODS
FUTURE RESEARCH
GDP
GDP PER CAPITA
GOVERNMENT BUDGET
GOVERNMENT DEBT
GOVERNMENT DEFICIT
GOVERNMENT EXPENDITURE
GOVERNMENT EXPENDITURES
GOVERNMENT FINANCING
GOVERNMENT REVENUE
GOVERNMENT REVENUES
GOVERNMENT SPENDING
HEDGES
HUMAN CAPITAL
HURRICANES
INCOME
INCOME LEVEL
INCOME LEVELS
INDEBTEDNESS
INFLATION
INFLATION RATE
INITIAL DEBT
INSURANCE
INSURANCE MARKET
INSURANCE MARKETS
INSURANCE PENETRATION
INSURANCE POLICIES
INSURANCE PREMIUM
INTEREST COSTS
INTEREST PAYMENTS
INTEREST RATE
INTEREST RATE RISK
INTEREST RATES
INTERNATIONAL BANK
INTERNATIONAL DEBT
INTERNATIONAL DEBT MARKETS
INTERNATIONAL ECONOMICS
INTERNATIONAL FINANCIAL MARKETS
INTERNATIONAL FINANCIAL STATISTICS
ISSUANCE
LESS DEVELOPED COUNTRIES
LEVEL OF DEBT
LLC
LOW INTEREST RATES
MACROECONOMIC CONDITIONS
MACROECONOMIC FLUCTUATIONS
MACROECONOMIC PERFORMANCE
MACROECONOMIC VARIABLE
MACROECONOMIC VARIABLES
MACROECONOMICS
MARGINAL PRODUCT
MARKET DEVELOPMENT
MIDDLE INCOME COUNTRIES
MONETARY FUND
MONETARY POLICY
MONEY MARKET
MONEY MARKET RATE
MONEY MARKET RATES
MULTIPLIER EFFECT
MULTIPLIERS
NATURAL CATASTROPHES
NATURAL DISASTER
NATURAL DISASTERS
OPEN ECONOMY
OUTPUT LOSS
OUTPUT LOSSES
PRICE VALUES
PRIVATE CREDIT
PUBLIC FINANCE
PUBLIC FINANCES
PUBLIC GOOD
PURCHASING POWER
PURCHASING POWER PARITY
REAL GDP
RECEIPTS
RECONSTRUCTION
RETURN
RISK MANAGEMENT
RISK MITIGATION
RISK PREMIUM
SAFETY NETS
SOURCES OF FUNDS
SOVEREIGN DEBT
TAX
TAX COLLECTIONS
TAXATION
TIDAL WAVES
TOTAL DEBT
VOLCANO
WAGES
WEALTH
WEALTH EFFECT
WEALTH EFFECTS
spellingShingle ACCESS TO CAPITAL
ACCESS TO CREDIT
ACCESS TO DEBT MARKETS
ACCESS TO FUNDS
ACCIDENTS
AUTOREGRESSION
BANK POLICY
BIASES
BORROWING
BUDGET CONSTRAINT
BUDGET DEFICIT
BUDGET DEFICITS
BUSINESS CYCLE
CAPITAL MARKETS
CAPITAL STOCK
CASH PAYMENTS
CD
CREDIT CONSTRAINT
CREDITS
DAMAGES
DEBT
DEBT BURDEN
DEBT BURDENS
DEBT INSTRUMENTS
DEBT LEVEL
DEBT LEVELS
DEFICIT FINANCING
DEFICITS
DEPOSIT
DEPOSIT INTEREST
DEVELOPING COUNTRIES
DEVELOPMENT BANK
DEVELOPMENT ECONOMICS
DEVELOPMENT POLICY
DISASTER MITIGATION
DISASTER MITIGATION MEASURES
DISASTER REDUCTION
DISASTER RELIEF
DISASTER RESPONSE
DISASTER RISK
DOMESTIC DEBT
DROUGHTS
EARTHQUAKES
ECONOMETRIC ANALYSIS
ECONOMETRICS
ECONOMIC ACTIVITY
ECONOMIC DEVELOPMENT
EMERGENCY RELIEF
ENDOGENOUS VARIABLES
EXCHANGE RATE
EXOGENOUS VARIABLES
EXPENDITURE
EXPORTS
EXTERNAL SHOCKS
FAMINES
FINANCIAL COSTS
FINANCIAL DEVELOPMENT
FINANCIAL INSTRUMENTS
FINANCIAL MARKET
FINANCIAL PRODUCTS
FINANCIAL RESOURCES
FINANCIAL RISKS
FINANCIAL SUPPORT
FINANCIAL SYSTEM
FISCAL BURDENS
FISCAL DEFICIT
FISCAL EFFORT
FISCAL POLICY
FISCAL RESOURCES
FLOODS
FUTURE RESEARCH
GDP
GDP PER CAPITA
GOVERNMENT BUDGET
GOVERNMENT DEBT
GOVERNMENT DEFICIT
GOVERNMENT EXPENDITURE
GOVERNMENT EXPENDITURES
GOVERNMENT FINANCING
GOVERNMENT REVENUE
GOVERNMENT REVENUES
GOVERNMENT SPENDING
HEDGES
HUMAN CAPITAL
HURRICANES
INCOME
INCOME LEVEL
INCOME LEVELS
INDEBTEDNESS
INFLATION
INFLATION RATE
INITIAL DEBT
INSURANCE
INSURANCE MARKET
INSURANCE MARKETS
INSURANCE PENETRATION
INSURANCE POLICIES
INSURANCE PREMIUM
INTEREST COSTS
INTEREST PAYMENTS
INTEREST RATE
INTEREST RATE RISK
INTEREST RATES
INTERNATIONAL BANK
INTERNATIONAL DEBT
INTERNATIONAL DEBT MARKETS
INTERNATIONAL ECONOMICS
INTERNATIONAL FINANCIAL MARKETS
INTERNATIONAL FINANCIAL STATISTICS
ISSUANCE
LESS DEVELOPED COUNTRIES
LEVEL OF DEBT
LLC
LOW INTEREST RATES
MACROECONOMIC CONDITIONS
MACROECONOMIC FLUCTUATIONS
MACROECONOMIC PERFORMANCE
MACROECONOMIC VARIABLE
MACROECONOMIC VARIABLES
MACROECONOMICS
MARGINAL PRODUCT
MARKET DEVELOPMENT
MIDDLE INCOME COUNTRIES
MONETARY FUND
MONETARY POLICY
MONEY MARKET
MONEY MARKET RATE
MONEY MARKET RATES
MULTIPLIER EFFECT
MULTIPLIERS
NATURAL CATASTROPHES
NATURAL DISASTER
NATURAL DISASTERS
OPEN ECONOMY
OUTPUT LOSS
OUTPUT LOSSES
PRICE VALUES
PRIVATE CREDIT
PUBLIC FINANCE
PUBLIC FINANCES
PUBLIC GOOD
PURCHASING POWER
PURCHASING POWER PARITY
REAL GDP
RECEIPTS
RECONSTRUCTION
RETURN
RISK MANAGEMENT
RISK MITIGATION
RISK PREMIUM
SAFETY NETS
SOURCES OF FUNDS
SOVEREIGN DEBT
TAX
TAX COLLECTIONS
TAXATION
TIDAL WAVES
TOTAL DEBT
VOLCANO
WAGES
WEALTH
WEALTH EFFECT
WEALTH EFFECTS
Melecky, Martin
Raddatz, Claudio
How Do Governments Respond after Catastrophes? Natural-Disaster Shocks and the Fiscal Stance
geographic_facet Europe and Central Asia
relation Policy Research working paper ; no. WPS 5564
description Natural disasters could constitute a major shock to public finances and debt sustainability because of their impact on output and the need for reconstruction and relief expenses. This paper uses a panel vector autoregressive model to systematically estimate the impact of geological, climatic, and other types of natural disasters on government expenditures and revenues using annual data for high and middle-income countries over 1975-2008. The authors find that, on average budget, deficits increase only after climatic disasters, but for lower-middle-income countries, the increase in deficits is widespread across all events. Disasters do not lead to larger deficit increases or larger output declines in countries with higher initial government debt. Countries with higher financial development suffer smaller real consequences from disasters, but deficits expand further in these countries. Disasters in countries with high insurance penetration also have smaller real consequences but do not result in deficit expansions. From an ex-post perspective, the availability of insurance offers the best mitigation approach against real and fiscal consequences of disasters.
format Publications & Research :: Policy Research Working Paper
author Melecky, Martin
Raddatz, Claudio
author_facet Melecky, Martin
Raddatz, Claudio
author_sort Melecky, Martin
title How Do Governments Respond after Catastrophes? Natural-Disaster Shocks and the Fiscal Stance
title_short How Do Governments Respond after Catastrophes? Natural-Disaster Shocks and the Fiscal Stance
title_full How Do Governments Respond after Catastrophes? Natural-Disaster Shocks and the Fiscal Stance
title_fullStr How Do Governments Respond after Catastrophes? Natural-Disaster Shocks and the Fiscal Stance
title_full_unstemmed How Do Governments Respond after Catastrophes? Natural-Disaster Shocks and the Fiscal Stance
title_sort how do governments respond after catastrophes? natural-disaster shocks and the fiscal stance
publishDate 2012
url http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110207134355
http://hdl.handle.net/10986/3331
_version_ 1764386808078008320
spelling okr-10986-33312021-04-23T14:02:08Z How Do Governments Respond after Catastrophes? Natural-Disaster Shocks and the Fiscal Stance Melecky, Martin Raddatz, Claudio ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO DEBT MARKETS ACCESS TO FUNDS ACCIDENTS AUTOREGRESSION BANK POLICY BIASES BORROWING BUDGET CONSTRAINT BUDGET DEFICIT BUDGET DEFICITS BUSINESS CYCLE CAPITAL MARKETS CAPITAL STOCK CASH PAYMENTS CD CREDIT CONSTRAINT CREDITS DAMAGES DEBT DEBT BURDEN DEBT BURDENS DEBT INSTRUMENTS DEBT LEVEL DEBT LEVELS DEFICIT FINANCING DEFICITS DEPOSIT DEPOSIT INTEREST DEVELOPING COUNTRIES DEVELOPMENT BANK DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISASTER MITIGATION DISASTER MITIGATION MEASURES DISASTER REDUCTION DISASTER RELIEF DISASTER RESPONSE DISASTER RISK DOMESTIC DEBT DROUGHTS EARTHQUAKES ECONOMETRIC ANALYSIS ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT EMERGENCY RELIEF ENDOGENOUS VARIABLES EXCHANGE RATE EXOGENOUS VARIABLES EXPENDITURE EXPORTS EXTERNAL SHOCKS FAMINES FINANCIAL COSTS FINANCIAL DEVELOPMENT FINANCIAL INSTRUMENTS FINANCIAL MARKET FINANCIAL PRODUCTS FINANCIAL RESOURCES FINANCIAL RISKS FINANCIAL SUPPORT FINANCIAL SYSTEM FISCAL BURDENS FISCAL DEFICIT FISCAL EFFORT FISCAL POLICY FISCAL RESOURCES FLOODS FUTURE RESEARCH GDP GDP PER CAPITA GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT DEFICIT GOVERNMENT EXPENDITURE GOVERNMENT EXPENDITURES GOVERNMENT FINANCING GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SPENDING HEDGES HUMAN CAPITAL HURRICANES INCOME INCOME LEVEL INCOME LEVELS INDEBTEDNESS INFLATION INFLATION RATE INITIAL DEBT INSURANCE INSURANCE MARKET INSURANCE MARKETS INSURANCE PENETRATION INSURANCE POLICIES INSURANCE PREMIUM INTEREST COSTS INTEREST PAYMENTS INTEREST RATE INTEREST RATE RISK INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEBT INTERNATIONAL DEBT MARKETS INTERNATIONAL ECONOMICS INTERNATIONAL FINANCIAL MARKETS INTERNATIONAL FINANCIAL STATISTICS ISSUANCE LESS DEVELOPED COUNTRIES LEVEL OF DEBT LLC LOW INTEREST RATES MACROECONOMIC CONDITIONS MACROECONOMIC FLUCTUATIONS MACROECONOMIC PERFORMANCE MACROECONOMIC VARIABLE MACROECONOMIC VARIABLES MACROECONOMICS MARGINAL PRODUCT MARKET DEVELOPMENT MIDDLE INCOME COUNTRIES MONETARY FUND MONETARY POLICY MONEY MARKET MONEY MARKET RATE MONEY MARKET RATES MULTIPLIER EFFECT MULTIPLIERS NATURAL CATASTROPHES NATURAL DISASTER NATURAL DISASTERS OPEN ECONOMY OUTPUT LOSS OUTPUT LOSSES PRICE VALUES PRIVATE CREDIT PUBLIC FINANCE PUBLIC FINANCES PUBLIC GOOD PURCHASING POWER PURCHASING POWER PARITY REAL GDP RECEIPTS RECONSTRUCTION RETURN RISK MANAGEMENT RISK MITIGATION RISK PREMIUM SAFETY NETS SOURCES OF FUNDS SOVEREIGN DEBT TAX TAX COLLECTIONS TAXATION TIDAL WAVES TOTAL DEBT VOLCANO WAGES WEALTH WEALTH EFFECT WEALTH EFFECTS Natural disasters could constitute a major shock to public finances and debt sustainability because of their impact on output and the need for reconstruction and relief expenses. This paper uses a panel vector autoregressive model to systematically estimate the impact of geological, climatic, and other types of natural disasters on government expenditures and revenues using annual data for high and middle-income countries over 1975-2008. The authors find that, on average budget, deficits increase only after climatic disasters, but for lower-middle-income countries, the increase in deficits is widespread across all events. Disasters do not lead to larger deficit increases or larger output declines in countries with higher initial government debt. Countries with higher financial development suffer smaller real consequences from disasters, but deficits expand further in these countries. Disasters in countries with high insurance penetration also have smaller real consequences but do not result in deficit expansions. From an ex-post perspective, the availability of insurance offers the best mitigation approach against real and fiscal consequences of disasters. 2012-03-19T18:00:28Z 2012-03-19T18:00:28Z 2011-02-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110207134355 http://hdl.handle.net/10986/3331 English Policy Research working paper ; no. WPS 5564 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper Europe and Central Asia