Document Type

Working Paper

Date

Fall 12-2016

Keywords

Natural Disaster, Panel Vector Autoregression, Intergovernmental Transfer

Language

English

Disciplines

Economics | Emergency and Disaster Management | Income Distribution | Public Affairs, Public Policy and Public Administration

Description/Abstract

This paper employs panel vector autoregression to examine the dynamic fiscal response to disaster shocks. With 50-state, 1970-2013 panel data of state government finance and disaster damage, we estimate disaster impacts on revenue, expenditure, debt issuance, and intergovernmental transfers. We find that following a disaster, states increase program expenditure, but receive more federal transfers. Disasters have limited impact on total tax revenues but amplify fluctuations in sales, income, and property tax revenues. Our findings suggest that disaster-induced additional spending is largely financed through federal transfers, which include not only disaster relief funds but also non-disaster-related public welfare aids.

ISSN

1525-3066

Additional Information

Working paper no. 199

wp199.pdf (1288 kB)
Accessible PDF version

Source

Local input

Creative Commons License

Creative Commons Attribution 3.0 License
This work is licensed under a Creative Commons Attribution 3.0 License.

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