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The fiscal implications of hurricane strikes in the Caribbean

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  • Ouattara, Bazoumana
  • Strobl, Eric

Abstract

This paper empirically traces the fiscal impacts of hurricane strikes. To this end, a hurricane damage index is derived from a physical wind field model for a panel of Caribbean countries over 36years. Results, based on panel VAR and impulse response functions analysis, show that, overall, hurricane strikes exert a short-term impact. Indeed, the study finds that the response of government spending is positive and significant while public investment, debt and tax revenue do not appear to respond (significantly) to hurricane strikes. Moreover, the study finds that Governments respond to hurricane strikes by engaging in short term deficit financing.

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  • Ouattara, Bazoumana & Strobl, Eric, 2013. "The fiscal implications of hurricane strikes in the Caribbean," Ecological Economics, Elsevier, vol. 85(C), pages 105-115.
    • Handle: RePEc:eee:ecolec:v:85:y:2013:i:c:p:105-115
    DOI: 10.1016/j.ecolecon.2012.10.002
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    1. Ilan Noy & Christopher Edmonds, 2019. "Increasing fiscal resilience to disasters in the Pacific," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 97(3), pages 1375-1393, July.
    2. Ilan Noy & Christopher Edmonds, 2016. "The Economic and Fiscal Burdens of Disasters in the Pacific," CESifo Working Paper Series 6237, CESifo.
    3. Simo Leppänen & Laura Solanko & Riitta Kosonen, 2017. "The Impact of Climate Change on Regional Government Expenditures: Evidence from Russia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(1), pages 67-92, May.
    4. Qing Miao & Michael Abrigo & Yilin Hou & Yanjun (Penny) Liao, 2023. "Extreme Weather Events and Local Fiscal Responses: Evidence from U.S. Counties," Economics of Disasters and Climate Change, Springer, vol. 7(1), pages 93-115, March.
    5. Jerch, Rhiannon & Kahn, Matthew E. & Lin, Gary C., 2023. "Local public finance dynamics and hurricane shocks," Journal of Urban Economics, Elsevier, vol. 134(C).
    6. Alessio Ciullo & Eric Strobl & Simona Meiler & Olivia Martius & David N. Bresch, 2022. "Increasing countries financial resilience through global catastrophe risk pooling," Papers 2206.13895, arXiv.org.
    7. Stefan Hochrainer-Stigler & Qinhan Zhu & Alessio Ciullo & Jonas Peisker & Bart Hurk, 2023. "Differential Fiscal Performances of Plausible Disaster Events: A Storyline Approach for the Caribbean and Central American Governments under CCRIF," Economics of Disasters and Climate Change, Springer, vol. 7(2), pages 209-229, July.
    8. Kunze, Sven, 2020. "Unraveling the effects of tropical cyclones on economic sectors worldwide," Working Papers 0685, University of Heidelberg, Department of Economics.
    9. Gabriel Bachner & Birgit Bednar-Friedl & Nina Knittel, 2019. "How does climate change adaptation affect public budgets? Development of an assessment framework and a demonstration for Austria," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 24(7), pages 1325-1341, October.
    10. Sungyoon Lee & Jennifer Dodge & Gang Chen, 2022. "The cost of social vulnerability: an integrative conceptual framework and model for assessing financial risks in natural disaster management," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 114(1), pages 691-712, October.
    11. Klomp, Jeroen, 2017. "Flooded with debt," Journal of International Money and Finance, Elsevier, vol. 73(PA), pages 93-103.
    12. Mohan, Preeya S. & Ouattara, Bazoumana & Strobl, Eric, 2018. "Decomposing the Macroeconomic Effects of Natural Disasters: A National Income Accounting Perspective," Ecological Economics, Elsevier, vol. 146(C), pages 1-9.
    13. Leppänen, Simo & Solanko, Laura & Kosonen, Riitta, 2015. "Could climate change affect government expenditures? Early evidence from the Russian regions," BOFIT Discussion Papers 27/2015, Bank of Finland, Institute for Economies in Transition.
    14. repec:zbw:bofitp:2015_027 is not listed on IDEAS
    15. Christopher Burgess & Michael Taylor & Tannecia Stephenson & Arpita Mandal & Leiska Powell, 2015. "A macro-scale flood risk model for Jamaica with impact of climate variability," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 78(1), pages 231-256, August.
    16. Christian Unterberger, 2018. "How Flood Damages to Public Infrastructure Affect Municipal Budget Indicators," Economics of Disasters and Climate Change, Springer, vol. 2(1), pages 5-20, April.
    17. Ilan Noy & Christopher Edmonds, 2016. "The Economic and Fiscal Burdens of Disasters in the Pacific," CESifo Working Paper Series 6237, CESifo.
    18. Preeya Mohan & Eric Strobl, 2021. "The impact of tropical storms on tax revenue," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(3), pages 472-489, April.
    19. Olivier R de Bandt & Luc Jacolin & Thibault Lemaire, 2021. "Climate Change in Developing Countries: Global Warming Effects, Transmission Channels and Adaptation Policies," Working Papers hal-03948704, HAL.
    20. Preeya Mohan & Eric Strobl, 2021. "The impact of tropical storms on the accumulation and composition of government debt," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(3), pages 483-496, June.
    21. Sven Kunze, 2021. "Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(4), pages 545-569, April.
    22. Mark Edem Kunawotor & Godfred Alufar Bokpin & Patrick O. Asuming & Kofi A. Amoateng, 2022. "The implications of climate change and extreme weather events for fiscal balance and fiscal policy in Africa," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(2), pages 470-492, December.
    23. Nekeisha Spencer & Eric Strobl, 2020. "Hurricanes, climate change, and social welfare: evidence from the Caribbean," Climatic Change, Springer, vol. 163(1), pages 337-357, November.

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