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Growth at Risk from Natural Disasters
Author:
Mr. Tamim Bayoumi
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Mr. Saad N Quayyum
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Sibabrata Das
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Series:
IMF Working Papers
Volume/Issue:
Volume 2021: Issue 234
Language:
English
Publication Date:
17 Sep 2021
DOI:
https://doi.org/10.5089/9781513597652.001
ISBN:
9781513597652
ISSN:
1018-5941
Pages:
25
Keywords:
disaster preparedness; impact of disaster; quantile regression; impact of natural disaster; regression estimator; Natural disasters; Fiscal space; Caribbean
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The paper analyzes the impact of natural disasters on per-capita GDP growth. Using a quantile regressions and growth-at-risk approach, the paper examines the impact of disasters and policy choices on the distribution of growth rather than simply its average. We find that countries that have in place disaster preparedness mechanisms and lower public debt have lower probability of witnessing a significant drop in growth as a consequence of a natural disaster, but our innovative methodology in this paper finds that the two policies are complements since their effectiveness vary across different disaster scenarios. While both are helpful for small to mid-size disasters, lower debt—and hence more fiscal space—is more beneficial in the face of very large disasters. A balanced strategy would thus involve both policies.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund