Cover IMF Working Papers
Natural Disasters and Scarring Effects
Author:
Weicheng Lian 0000000404811396 https://isni.org/isni/0000000404811396 International Monetary Fund

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,
Jose Ramon Moran
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Raadhika Vishvesh
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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 253
Language:
English
Publication Date:
16 Dec 2022
DOI:
https://doi.org/10.5089/9798400227172.001
ISBN:
9798400227172
ISSN:
1018-5941
Pages:
30
Keywords:
Natural disasters; scarring effects; synthetic control approach; IMF working papers; scarring effect; ante resilience; medium-term scarring; output effect; Tourism; Climate change; Caribbean; Global; Western Hemisphere
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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This paper uses a novel empirical approach, following the literature on hysteresis, to explore medium-term scarring of natural disasters for countries vulnerable to climate change. By quantifying the dynamic effects of natural disasters on real GDP per capita for a large number of episodes using a synthetic control approach (SCA) and focusing on severe shocks, we demonstrate that a persistently large deviation of real GDP per capita from the counterfacutal trend exists five years after a severe shock in many countries. The findings highlight the importance and urgency of building ex-ante resilience to avoid scarring effects for countries prone to natural disasters, such as those in the Caribbean region.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 253