The Role of Transfer Payments in Mitigating Shocks: Evidence From the Impact of Hurricanes

Deryugina, Tatyana (2011): The Role of Transfer Payments in Mitigating Shocks: Evidence From the Impact of Hurricanes.

Abstract

Little is known about how aggregate economic shocks are mitigated by social safety nets. I use hurricanes as an exogenous shock to the economics of US counties and show that non-disaster government transfers, such as unemployment insurance and public medical spending, increase substantially in the decade after landfall. Indeed, I estimate that the net present value of the increase in non-disaster transfers is more than double that of direct disaster aid. Among the implications of these findings are that the fiscal costs of natural disasters are much larger than previously thought and that existing social safety net programs help to mitigate the effects of macroeconomic shocks.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mitigation, Macroeconomic Shock, Transfer Payments
• Subjects: H - Public Economics > H5 - National Government Expenditures and Related Policies; H - Public Economics > H5 - National Government Expenditures and Related Policies > H53 - Government Expenditures and Welfare Programs; H - Public Economics > H8 - Miscellaneous Issues; H - Public Economics > H8 - Miscellaneous Issues > H84 - Disaster Aid; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming

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