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The Macroeconomic and Welfare Benefits of Building Resilience in Disaster-Prone Developing Countries
Author:
Yehenew Endegnanew https://isni.org/isni/0000000404811396 International Monetary Fund

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,
Rafael D Goncalves
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Samuel Mann https://isni.org/isni/0000000404811396 International Monetary Fund

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Marina Mendes Tavares
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Harold Zavarce
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Series:
IMF Working Papers
Volume/Issue:
Volume 2025: Issue 013
Language:
English
Publication Date:
17 Jan 2025
DOI:
https://doi.org/10.5089/9798400296789.001
ISBN:
9798400296789
ISSN:
1018-5941
Pages:
46
Keywords:
Resilient investment; natural disasters; macroeconomics; fiscal sustainability.; implications of financing resilience-building; resilient capital; welfare implication; revenue matter; credit market; Human capital; Consumption; Energy sector; Global
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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Natural disasters often have high economic costs, setting back years of investment in developing countries. This paper develops a multi-sector DSGE model to study the macroeconomic and welfare implications of financing resilience-building using different fiscal instruments. The model includes developing countries’ macroeconomic and distributional features, such as a large unproductive rural sector, an incomplete credit market, and an informal sector. The results indicate that investing in resilience capital in a disaster-prone country improves welfare despite its high economic cost, but the financial instrument used to mobilize revenue matters.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund