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Natural Disasters And Debt Financing Costs

Author

Listed:
  • BORIS FISERA

    (Slovak Academy of Sciences, Bratislava, Slovakia†Institute of Economic Studies, Faculty of Social Sciences, Charles University, Czech Republic)

  • ROMAN HORVATH

    (��Institute of Economic Studies, Faculty of Social Sciences, Charles University, Czech Republic)

  • MARTIN MELECKY

    (��World Bank, Washington DC, USA§Technical University of Ostrava, Ostrava, Czechia)

Abstract

Using a comprehensive dataset of 272 large-scale natural disasters in 83 countries from 1986 to 2018, we find that disasters increase government debt financing costs (T-bill rates and 10-year government bond yields) but only in the middle- and low-income countries. This distinct response relative to high-income countries is due to lower levels of credit market depth, of private insurance penetration, and of central bank independence. The results for all natural disasters are driven by biological (epidemic) and climatological disasters — two types of hazards, the frequency and severity of which have been rising.

Suggested Citation

  • Boris Fisera & Roman Horvath & Martin Melecky, 2023. "Natural Disasters And Debt Financing Costs," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 14(03), pages 1-24, August.
    • Handle: RePEc:wsi:ccexxx:v:14:y:2023:i:03:n:s201000782350015x
    DOI: 10.1142/S201000782350015X
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    Cited by:

    1. Pham, Son Duy & Nguyen, Thao Thac Thanh & Li, Xiao-Ming, 2024. "Stabilizing global foreign exchange markets in the time of COVID-19: The role of vaccinations," Global Finance Journal, Elsevier, vol. 59(C).
    2. Susana Ferreira, 2024. "Extreme Weather Events and Climate Change: Economic Impacts and Adaptation Policies," Annual Review of Resource Economics, Annual Reviews, vol. 16(1), pages 207-231, October.

    More about this item

    Keywords

    Natural disasters; interest rates; government;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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