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Unmitigated disasters? New evidence on the macroeconomic cost of natural catastrophes

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  • Goetz von Peter
  • Sebastian von Dahlen
  • Sweta C Saxena

Abstract

This paper presents a large panel study on the macroeconomic consequences of natural catastrophes and analyzes the extent to which risk transfer to insurance markets facilitates economic recovery. Our main results are that major natural catastrophes have large and signi cant negative e ects on economic activity, both on impact and over the longer run. However, it is mainly the uninsured losses that drive the subsequent macroeconomic cost, whereas sufficiently insured events are inconsequential in terms of foregone output. This result helps to disentangle conicting ndings in the literature, and puts the focus on risk transfer mechanisms to help mitigate the macroeconomic costs of natural catastrophes.

Suggested Citation

  • Goetz von Peter & Sebastian von Dahlen & Sweta C Saxena, 2012. "Unmitigated disasters? New evidence on the macroeconomic cost of natural catastrophes," BIS Working Papers 394, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:394
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    References listed on IDEAS

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    Keywords

    natural catastrophes; disasters; economic growth; insurance; risk transfer; reinsurance; recovery; development;
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