Macroeconomic Outcomes In Disaster Prone Countries
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Macroeconomic Outcomes In Disaster Prone Countries
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Author : Mr.Alessandro Cantelmo
language : en
Publisher: International Monetary Fund
Release Date : 2019-10-11
Macroeconomic Outcomes In Disaster Prone Countries written by Mr.Alessandro Cantelmo and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-10-11 with Nature categories.
Using a dynamic stochastic general equilibrium model, we study the channels through which natural disaster shocks affect macroeconomic outcomes and welfare in disaster-prone countries. We solve the model using Taylor projection, a solution method that is shown to deal effectively with high-impact weather shocks calibrated in accordance to empirical evidence. We find large and persistent effects of weather shocks that significantly impact the income convergence path of disaster-prone countries. Relative to non-disaster-prone countries, on average, these shocks cause a welfare loss equivalent to a permanent fall in consumption of 1.6 percent. Welfare gains to countries that self-finance investments in resilient public infrastructure are found to be negligible, and international aid has to be sizable to achieve significant welfare gains. In addition, it is more cost-effective for donors to contribute to the financing of resilience before the realization of disasters, rather than disbursing aid after their realization.
Monetary Policy In Disaster Prone Developing Countries
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Author : Mr. Alessandro Cantelmo
language : en
Publisher: International Monetary Fund
Release Date : 2022-04
Monetary Policy In Disaster Prone Developing Countries written by Mr. Alessandro Cantelmo and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-04 with Business & Economics categories.
This paper analyzes monetary policy regimes in emerging and developing economies where climate-related natural disasters are major macroeconomic shocks. A narrative analysis of IMF reports published around the occurrence of natural disasters documents their impact on important macroeconomic variables and monetary policy responses. While countries with at least some degree of monetary policy independence typically react by tightening the monetary policy stance, in a sizable number of cases monetary policy was accommodated. Given the lack of consensus on best practices in these circumstances, a small open-economy New-Keynesian model with disaster shocks is leveraged to evaluate welfare under alternative monetary policy rules. Results suggest that responding to inflation to an extent sufficient to keep inflation expectations anchored, while allowing temporary deviations from its target is the welfare maximizing policy. Alternative regimes such as strict inflation targeting, exchange rate pegs, or Taylor rules explicitly responding to economic activity or the exchange rate would be welfare-detrimental.
Enhancing Macroeconomic Resilience To Natural Disasters And Climate Change In The Small States Of The Pacific
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Author : Ezequiel Cabezon
language : en
Publisher: International Monetary Fund
Release Date : 2015-06-19
Enhancing Macroeconomic Resilience To Natural Disasters And Climate Change In The Small States Of The Pacific written by Ezequiel Cabezon and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-06-19 with Business & Economics categories.
Natural disasters and climate change are interrelated macro-critical issues affecting all Pacific small states to varying degrees. In addition to their devastating human costs, these events damage growth prospects and worsen countries’ fiscal positions. This is the first cross-country IMF study assessing the impact of natural disasters on growth in the Pacific islands as a group. A panel VAR analysis suggests that, for damage and losses equivalent to 1 percent of GDP, growth drops by 0.7 percentage point in the year of the disaster. We also find that, during 1980-2014, trend growth was 0.7 percentage point lower than it would have been without natural disasters. The paper also discusses a multi-pillar framework to enhance resilience to natural disasters at the national, regional, and multilateral levels and the importance of enhancing countries’ risk-management capacities. It highlights how this approach can provide a more strategic and less ad hoc framework for strengthening both ex ante and ex post resilience and what role the IMF can play.
Macroeconomic Risk Management Against Natural Disasters
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Author : Stefan Hochrainer
language : en
Publisher: Springer Science & Business Media
Release Date : 2007-12-14
Macroeconomic Risk Management Against Natural Disasters written by Stefan Hochrainer and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-12-14 with Business & Economics categories.
Stefan Hochrainer develops a catastrophe risk management model. It illustrates which trade-offs and choices a country must make in managing economic risks due to natural disasters. Budgetary resources are allocated to pre-disaster risk management strategies to reduce the probability of financing gaps. The framework and model approach allows cross country comparisons as well as the assessment of financial vulnerability, macroeconomic risk, and risk management strategies. Three case studies demonstrate its flexibility and coherent approach.
The Economic Impact Of Natural Disasters In Pacific Island Countries Adaptation And Preparedness
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Author : Dongyeol Lee
language : en
Publisher: International Monetary Fund
Release Date : 2018-05-10
The Economic Impact Of Natural Disasters In Pacific Island Countries Adaptation And Preparedness written by Dongyeol Lee and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-05-10 with Business & Economics categories.
Pacific island countries are highly vulnerable to various natural disasters which are destructive, unpredictable and occur frequently. The frequency and scale of these shocks heightens the importance of medium-term economic and fiscal planning to minimize the adverse impact of disasters on economic development. This paper identifies the intensity of natural disasters for each country in the Pacific based on the distribution of damage and population affected by disasters, and estimates the impact of disasters on economic growth and international trade using a panel regression. The results show that “severe” disasters have a significant and negative impact on economic growth and lead to a deterioration of the fiscal and trade balance. We also find that the negative impact on growth is stronger for more intense disasters. Going further this paper proposes a simple and consistent method to adjust IMF staff’s economic projections and debt sustainability analysis for disaster shocks for the Pacific islands. Better incorporating the economic impact of natural disasters in the medium- and long-term economic planning would help policy makers improve fiscal policy decisions and to be better adapted and prepared for natural disasters.
Macroeconomic Implications Of Natural Disasters In The Caribbean
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Author : Mr.Tobias N. Rasmussen
language : en
Publisher: INTERNATIONAL MONETARY FUND
Release Date : 2004-12-01
Macroeconomic Implications Of Natural Disasters In The Caribbean written by Mr.Tobias N. Rasmussen and has been published by INTERNATIONAL MONETARY FUND this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004-12-01 with Nature categories.
Each year natural disasters affect about 200 million people and cause about $50 billion in damage. This paper compares the incidence of natural disasters across countries along several dimensions and finds that the relative costs tend to be far higher in developing countries than in advanced economies. The analysis shows that small island states are especially vulnerable, with the countries of the Eastern Caribbean standing out as among the most disaster-prone in the world. Natural disasters are found to have had a discernible macroeconomic impact, including large effects on fiscal and external balances, pointing to an important role for precautionary measures.
Natural Disasters And Scarring Effects
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Author : Weicheng Lian
language : en
Publisher: International Monetary Fund
Release Date : 2022-12-16
Natural Disasters And Scarring Effects written by Weicheng Lian and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-12-16 with Business & Economics categories.
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.
Small States Resilience To Natural Disasters And Climate Change Role For The Imf
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Author : International Monetary Fund
language : en
Publisher: International Monetary Fund
Release Date : 2016-07-11
Small States Resilience To Natural Disasters And Climate Change Role For The Imf written by International Monetary Fund and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-07-11 with Nature categories.
Small developing states are disproportionately vulnerable to natural disasters. On average, the annual cost of disasters for small states is nearly 2 percent of GDP—more than four times that for larger countries. This reflects a higher frequency of disasters, adjusted for land area, as well as greater vulnerability to severe disasters. About 9 percent of disasters in small states involve damage of more than 30 percent of GDP, compared to less than 1 percent for larger states. Greater exposure to disasters has important macroeconomic effects on small states, resulting in lower investment, lower GDP per capita, higher poverty, and a more volatile revenue base.
Macroeconomic Implications Of Natural Disasters In The Caribbean
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Author : Tobias Rasmussen
language : en
Publisher:
Release Date : 2006
Macroeconomic Implications Of Natural Disasters In The Caribbean written by Tobias Rasmussen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
Each year natural disasters affect about 200 million people and cause about $50 billion in damage. This paper compares the incidence of natural disasters across countries along several dimensions and finds that the relative costs tend to be far higher in developing countries than in advanced economies. The analysis shows that small island states are especially vulnerable, with the countries of the Eastern Caribbean standing out as among the most disaster-prone in the world. Natural disasters are found to have had a discernible macroeconomic impact, including large effects on fiscal and external balances, pointing to an important role for precautionary measures.
Macroeconomic Outcomes In Disaster Prone Countries
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Author : Mr.Alessandro Cantelmo
language : en
Publisher: International Monetary Fund
Release Date : 2019-10-11
Macroeconomic Outcomes In Disaster Prone Countries written by Mr.Alessandro Cantelmo and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-10-11 with Nature categories.
Using a dynamic stochastic general equilibrium model, we study the channels through which natural disaster shocks affect macroeconomic outcomes and welfare in disaster-prone countries. We solve the model using Taylor projection, a solution method that is shown to deal effectively with high-impact weather shocks calibrated in accordance to empirical evidence. We find large and persistent effects of weather shocks that significantly impact the income convergence path of disaster-prone countries. Relative to non-disaster-prone countries, on average, these shocks cause a welfare loss equivalent to a permanent fall in consumption of 1.6 percent. Welfare gains to countries that self-finance investments in resilient public infrastructure are found to be negligible, and international aid has to be sizable to achieve significant welfare gains. In addition, it is more cost-effective for donors to contribute to the financing of resilience before the realization of disasters, rather than disbursing aid after their realization.