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Municipalities' budgetary response to natural disasters

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  • Carla Morvan

    (GATE UMR 5824, 93 Chemin des mouilles, F-69130 Ecully (France))

Abstract

The objective of this study is to analyze the causal impact of natural disasters on municipal budget choices, using a original database that allows us to study a sample of several thousand municipalities, 22,972 of which were affected by a natural disaster between 2000 and 2019. This quasi-experimental setting allows us to use panel regression models to estimate municipalities' responses to a shock and with respect to their prevention strategies. We find evidence of increased spending for about 10 years after the disaster, together with increased in revenues and debt. Furthermore, it appears that prevention allows municipalities to effectively mitigate the effect of the disaster in terms of public spending, as municipalities with a natural hazard prevention plan in place did not increase their spending and their debt in the long run.

Suggested Citation

  • Carla Morvan, 2022. "Municipalities' budgetary response to natural disasters," Working Papers 2206, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    • Handle: RePEc:gat:wpaper:2206
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    References listed on IDEAS

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    Cited by:

    1. Carla Morvan & Sonia Paty, 2024. "Natural disasters and voter gratitude: What is the role of prevention policies?," Public Choice, Springer, vol. 198(3), pages 427-465, March.

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    More about this item

    Keywords

    Local public finance; Local expenditure; Natural disasters; Risks prevention;
    All these keywords.

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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