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Open AccessArticle

Changes in Natural Disaster Risk: Macroeconomic Responses in Selected Latin American Countries

1
HECER, University of Helsinki, FI-00014 Helsinki, Finland
2
Bank of Finland, 00101 Helsinki, Finland1
Economies 2018, 6(1), 13; https://doi.org/10.3390/economies6010013
Received: 29 November 2017 / Revised: 31 January 2018 / Accepted: 1 February 2018 / Published: 26 February 2018
(This article belongs to the Special Issue Natural Hazards and Economic Development)
This paper studies the theoretical effects of changes in disaster risk on macroeconomic variables in five Latin American economies. It compares country-specific variants of the New Keynesian model with disaster risk developed by Isoré and Szczerbowicz (2017). Countries with higher price flexibility, such as Argentina, Brazil, and Mexico, are found to be relatively less vulnerable to disaster risk shocks, as compared to Chile and Colombia in particular. Overall, the analysis suggests that increases in the probability of natural disasters over time may have significant macroeconomic effects, beyond the direct impact of actual disaster occurrences themselves. View Full-Text
Keywords: natural disasters; disaster risk; DSGE models; business cycles; Latin America natural disasters; disaster risk; DSGE models; business cycles; Latin America
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Isoré, M. Changes in Natural Disaster Risk: Macroeconomic Responses in Selected Latin American Countries. Economies 2018, 6, 13.

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