Growth at Risk from Natural Disasters

25 Pages Posted: 4 Feb 2022

See all articles by Tamim Bayoumi

Tamim Bayoumi

Independent

Saad Quayyum

International Monetary Fund (IMF)

Sibabrata Das

International Monetary Fund (IMF)

Date Written: September 1, 2021

Abstract

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.

Keywords: disaster preparedness, impact of disaster, quantile regression, impact of natural disaster, regression estimator, Natural disasters, Fiscal space, Caribbean

JEL Classification: E62, E63, H60, O40, Q54, H63

Suggested Citation

Bayoumi, Tamim and Quayyum, Saad and Das, Sibabrata, Growth at Risk from Natural Disasters (September 1, 2021). IMF Working Paper No. 2021/234, Available at SSRN: https://ssrn.com/abstract=4026436

Saad Quayyum

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Sibabrata Das

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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