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Natural Disaster Modeling with the DSGE DIGNAD Framework: A Study of Madagascar

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  • Josué, ANDRIANADY

Abstract

This study utilizes the DSGE model DIGNAD to assess the economic impacts of natural disasters on Madagascar. Four distinct scenarios are analyzed: the first scenario (zero scenario) simulates the effects of a natural shock occurring in 2027. The second scenario evaluates the impact of investing 1% of GDP in resilient infrastructure over a 5-year period preceding the shock. The third scenario examines the outcomes of a similar 1% GDP investment in standard, non-resilient infrastructurebefore the shock. The fourth scenario considers the implications of a 2% GDP investment in resilient infrastructure aimed at enhancing the country’s relatively low GDP, currently at around 31%. The findings reveal a projected contraction of approximately 6% in GDP growth in the event of the shock. Investing in resilient infrastructure significantly mitigates the decline in growth, reducing it by about 2% of GDP. Despite this benefit, the substantial financial requirements for such infrastructure present a considerable challenge for Madagascar.

Suggested Citation

  • Josué, ANDRIANADY, 2024. "Natural Disaster Modeling with the DSGE DIGNAD Framework: A Study of Madagascar," MPRA Paper 121646, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:121646
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    File URL: https://mpra.ub.uni-muenchen.de/121646/1/MPRA_paper_121646.pdf
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    More about this item

    Keywords

    DSGE model; DIGNAD; natural disasters; economic impact; resilient infrastructure; Madagascar; GDP growth; investment scenarios.;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • A10 - General Economics and Teaching - - General Economics - - - General
    • E0 - Macroeconomics and Monetary Economics - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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