Munich Personal RePEc Archive

Frequency of Shocks, Resilience and Shock Persistence: Evidence from Natural Disasters

Bashar, Omar and Mallick, Debdulal (2021): Frequency of Shocks, Resilience and Shock Persistence: Evidence from Natural Disasters.

[img]
Preview
PDF
MPRA_paper_107517.pdf

Download (14MB) | Preview

Abstract

Volatility persistence has important welfare consequences. In this paper, we investigate the effect on volatility persistence of the frequency of shocks for which we consider exogenous natural disasters. We find that, on average, volatility persistence is about 5 percent lower in countries that have experienced one more natural disasters per year. However, there is a non-linearity in that volatility persistence initially decreases and then increases with the frequency of natural disasters. The results are explained in terms of disaster resilience—countries that experience natural disasters frequently develop resilience that shields the economy from the destruction of natural disasters and/or expedites economic recovery. Among the factors that potentially create resilience, we find significance of its structural component.

Logo of the University Library LMU Munich
MPRA is a RePEc service hosted by
the University Library LMU Munich in Germany.