The Role of Transfer Payments in Mitigating Shocks: Evidence from the Impact of Hurricanes

63 Pages Posted: 24 Aug 2013

Date Written: August 8, 2013

Abstract

Little is known about how aggregate economic shocks are mitigated by social safety nets. I use hurricanes as an exogenous shock to the economies of US counties and show that non-disaster government transfers, such as unemployment insurance and public medical spending, increase substantially in the decade after landfall. Indeed, I estimate that the net present value of the increase in non-disaster transfers is more than double that of direct disaster aid. Among the implications of these findings are that the fiscal costs of natural disasters are much larger than previously thought and that existing social safety net programs help to mitigate the effects of macroeconomic shocks.

JEL Classification: Q54, H84, H53

Suggested Citation

Deryugina, Tatyana, The Role of Transfer Payments in Mitigating Shocks: Evidence from the Impact of Hurricanes (August 8, 2013). Available at SSRN: https://ssrn.com/abstract=2314663 or http://dx.doi.org/10.2139/ssrn.2314663

Tatyana Deryugina (Contact Author)

University of Illinois ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

HOME PAGE: http://deryugina.com

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