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This paper provides a description of the macroeconomic aftermath of natural disasters. It traces the yearly response of gross domestic product growth - both aggregated and disaggregated into its agricultural and non-agricultural components - to four types of natural disasters - droughts, floods, earthquakes, and storms. The paper uses a methodological approach based on pooling the experiences of various countries over time. It consists of vector auto-regressions in the presence of endogenous variables and exogenous shocks (VARX), applied to a panel of cross-country and time-series data. The analysis finds heterogeneous effects on a variety of dimensions. First, the effects of natural disasters are stronger, for better or worse, on developing than on rich countries. Second, while the impact of some natural disasters can be beneficial when they are of moderate intensity, severe disasters never have positive effects. Third, not all natural disasters are alike in terms of the growth response they induce, and, perhaps surprisingly, some can entail benefits regarding economic growth. Thus, droughts have a negative effect on both agricultural and non-agricultural growth. In contrast, floods tend to have a positive effect on economic growth in both major sectors. Earthquakes have a negative effect on agricultural growth but a positive one on non-agricultural growth. Storms tend to have a negative effect on gross domestic product growth but the effect is short-lived and small. Future research should concentrate on exploring the mechanisms behind these heterogeneous impacts.
Avalanches --- Catastrophic events --- Conflict and Development --- Disaster --- Disaster events --- Disaster Management --- Disaster reduction --- Disaster risk --- Disaster risk reduction --- Droughts --- Earthquake --- Earthquakes --- Environment --- Famines --- Floods --- Hazard Risk Management --- Natural Disaster --- Natural Disasters --- Natural hazards --- Poverty Reduction --- Pro-Poor Growth --- Reconstruction --- Storms --- Tsunamis --- Urban Development --- Volcano --- Wind storms
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This paper discusses the impact of foreign aid on the recipient country's preparedness against natural disasters. The theoretical model shows that foreign aid can have two opposing effects on a country's level of mitigating activities. In order to test the theoretical propositions, the authors analyze the effect of foreign aid dependence on ex-ante risk-management activity proxied by the death toll from major storms, floods and earthquakes occurring worldwide between 1980 and 2002. They find evidence that the crowding-out effect of foreign aid outweighs the preventive effect in the case of storms, while there is mixed evidence in the case of floods and earthquakes.
Conflict and Development --- Death tolls --- Disaster --- Disaster events --- Disaster Management --- Disaster preparedness --- Disaster reduction --- Disaster relief --- Disaster risk --- Disaster risk reduction --- Disaster victims --- Earthquake --- Earthquakes --- Environment --- Flood --- Floods --- Hazard Risk Management --- Hurricane --- Natural Disaster --- Natural Disasters --- Natural hazards --- Reconstruction --- Storm --- Storms --- Urban Development
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This paper provides a description of the macroeconomic aftermath of natural disasters. It traces the yearly response of gross domestic product growth - both aggregated and disaggregated into its agricultural and non-agricultural components - to four types of natural disasters - droughts, floods, earthquakes, and storms. The paper uses a methodological approach based on pooling the experiences of various countries over time. It consists of vector auto-regressions in the presence of endogenous variables and exogenous shocks (VARX), applied to a panel of cross-country and time-series data. The analysis finds heterogeneous effects on a variety of dimensions. First, the effects of natural disasters are stronger, for better or worse, on developing than on rich countries. Second, while the impact of some natural disasters can be beneficial when they are of moderate intensity, severe disasters never have positive effects. Third, not all natural disasters are alike in terms of the growth response they induce, and, perhaps surprisingly, some can entail benefits regarding economic growth. Thus, droughts have a negative effect on both agricultural and non-agricultural growth. In contrast, floods tend to have a positive effect on economic growth in both major sectors. Earthquakes have a negative effect on agricultural growth but a positive one on non-agricultural growth. Storms tend to have a negative effect on gross domestic product growth but the effect is short-lived and small. Future research should concentrate on exploring the mechanisms behind these heterogeneous impacts.
Avalanches --- Catastrophic events --- Conflict and Development --- Disaster --- Disaster events --- Disaster Management --- Disaster reduction --- Disaster risk --- Disaster risk reduction --- Droughts --- Earthquake --- Earthquakes --- Environment --- Famines --- Floods --- Hazard Risk Management --- Natural Disaster --- Natural Disasters --- Natural hazards --- Poverty Reduction --- Pro-Poor Growth --- Reconstruction --- Storms --- Tsunamis --- Urban Development --- Volcano --- Wind storms
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The debate on whether natural disasters cause significant macroeconomic impacts and indeed hinder development is ongoing. Most analyses along these lines have focused on impacts on gross domestic product. This paper looks beyond this standard national accounting aggregate, and examines whether traditional and alternative national savings measures combined with adjustments for the destruction of capital stocks may contribute to better explaining post-disaster changes in welfare as measured by changes in consumption expenditure. The author concludes that including disaster asset losses may help to better explain variations in post-disaster consumption, albeit almost exclusively for the group of low-income countries. The observed effect is rather small and in the range of a few percent of the explained variation. For low-income countries, capital stock and changes therein, such as forced by disaster shocks, seem to play a more important role than for higher-income economies, where human capital and technological progress become crucial. There are important data constraints and uncertainties, particularly regarding the quality of disaster loss data and the shares of capital stock losses therein. Another important challenge potentially biasing the results is the lack of data on alternative savings measures for many disaster-exposed lower-income countries and small island states.
Air pollution --- Banks and Banking Reform --- Centre for research on the epidemiology --- Climate change --- Conflict and Development --- CRED --- Damages --- Development network --- Disaster --- Disaster events --- Disaster Management --- Disaster reduction --- Disaster risk --- Disaster risk reduction --- Disasters --- Droughts --- Economic Theory and Research --- Emerging Markets --- Environment --- Finance and Financial Sector Development --- Financial Intermediation --- Hazard Risk Management --- Hurricane --- Insurance and Risk Mitigation --- Macroeconomics and Economic Growth --- Natural disaster --- Natural disasters --- Predictability --- Private Sector Development --- Relief --- Savings --- Sudden onset disasters --- Urban Development
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There is an ongoing debate on whether disasters cause significant macroeconomic impacts and are truly a potential impediment to economic development. This paper aims to assess whether and by what mechanisms disasters have the potential to cause significant GDP impacts. The analysis first studies the counterfactual versus the observed gross domestic product. Second, the analysis assesses disaster impacts as a function of hazard, exposure of assets, and, importantly, vulnerability. In a medium-term analysis (up to 5 years after the disaster event), comparing counterfactual with observed gross domestic product, the authors find that natural disasters on average can lead to negative consequences. Although the negative effects may be small, they can become more pronounced depending mainly on the size of the shock. Furthermore, the authors test a large number of vulnerability predictors and find that greater aid and inflows of remittances reduce adverse macroeconomic consequences, and that direct losses appear most critical.
Conflict and Development --- Currencies and Exchange Rates --- Debt Markets --- Disaster --- Disaster event --- Disaster events --- Disaster Management --- Disaster reduction --- Disaster risk --- Disaster risk reduction --- Drought --- Droughts --- Earthquake --- Earthquakes --- Economic Theory and Research --- Emerging Markets --- Environment --- Finance and Financial Sector Development --- Flood --- Floods --- Hazard Risk Management --- Hurricane --- Macroeconomics and Economic Growth --- Natural disaster --- Natural disaster reduction --- Natural Disasters --- Natural disasters --- Natural hazards --- Private Sector Development --- Reconstruction --- Storm --- Storms --- Urban Development
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There is an ongoing debate on whether disasters cause significant macroeconomic impacts and are truly a potential impediment to economic development. This paper aims to assess whether and by what mechanisms disasters have the potential to cause significant GDP impacts. The analysis first studies the counterfactual versus the observed gross domestic product. Second, the analysis assesses disaster impacts as a function of hazard, exposure of assets, and, importantly, vulnerability. In a medium-term analysis (up to 5 years after the disaster event), comparing counterfactual with observed gross domestic product, the authors find that natural disasters on average can lead to negative consequences. Although the negative effects may be small, they can become more pronounced depending mainly on the size of the shock. Furthermore, the authors test a large number of vulnerability predictors and find that greater aid and inflows of remittances reduce adverse macroeconomic consequences, and that direct losses appear most critical.
Conflict and Development --- Currencies and Exchange Rates --- Debt Markets --- Disaster --- Disaster event --- Disaster events --- Disaster Management --- Disaster reduction --- Disaster risk --- Disaster risk reduction --- Drought --- Droughts --- Earthquake --- Earthquakes --- Economic Theory and Research --- Emerging Markets --- Environment --- Finance and Financial Sector Development --- Flood --- Floods --- Hazard Risk Management --- Hurricane --- Macroeconomics and Economic Growth --- Natural disaster --- Natural disaster reduction --- Natural Disasters --- Natural disasters --- Natural hazards --- Private Sector Development --- Reconstruction --- Storm --- Storms --- Urban Development
Choose an application
The debate on whether natural disasters cause significant macroeconomic impacts and indeed hinder development is ongoing. Most analyses along these lines have focused on impacts on gross domestic product. This paper looks beyond this standard national accounting aggregate, and examines whether traditional and alternative national savings measures combined with adjustments for the destruction of capital stocks may contribute to better explaining post-disaster changes in welfare as measured by changes in consumption expenditure. The author concludes that including disaster asset losses may help to better explain variations in post-disaster consumption, albeit almost exclusively for the group of low-income countries. The observed effect is rather small and in the range of a few percent of the explained variation. For low-income countries, capital stock and changes therein, such as forced by disaster shocks, seem to play a more important role than for higher-income economies, where human capital and technological progress become crucial. There are important data constraints and uncertainties, particularly regarding the quality of disaster loss data and the shares of capital stock losses therein. Another important challenge potentially biasing the results is the lack of data on alternative savings measures for many disaster-exposed lower-income countries and small island states.
Air pollution --- Banks and Banking Reform --- Centre for research on the epidemiology --- Climate change --- Conflict and Development --- CRED --- Damages --- Development network --- Disaster --- Disaster events --- Disaster Management --- Disaster reduction --- Disaster risk --- Disaster risk reduction --- Disasters --- Droughts --- Economic Theory and Research --- Emerging Markets --- Environment --- Finance and Financial Sector Development --- Financial Intermediation --- Hazard Risk Management --- Hurricane --- Insurance and Risk Mitigation --- Macroeconomics and Economic Growth --- Natural disaster --- Natural disasters --- Predictability --- Private Sector Development --- Relief --- Savings --- Sudden onset disasters --- Urban Development
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