Measuring the Financial Shocks of Natural Disasters: A Panel Study of U.S. States

Qing Miao; Yilin Hou; Michael Abrigo

doi:10.17310/ntj.2018.1.01

Measuring the Financial Shocks of Natural Disasters: A Panel Study of U.S. States

Qing Miao, Yilin Hou, Michael Abrigo

Research output: Contribution to journal › Article › peer-review

43 Scopus citations

Abstract

This paper employs panel vector autoregression to examine the dynamic fiscal response to natural disasters. With 50-state, 1970–2013 panel data on state government finance and disaster damage, we estimate disaster impacts on revenue, expenditure, debt issuance, and federal-state transfers. We find that following a disaster, states increase program expenditure and 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 ad-ditional spending is largely financed through federal transfers, which include not only disaster relief funds but also non-disaster-related public welfare assistance.

Original language	English (US)
Pages (from-to)	11-44
Number of pages	34
Journal	National Tax Journal
Volume	71
Issue number	1
DOIs	https://doi.org/10.17310/ntj.2018.1.01
State	Published - Mar 2018
Externally published	Yes

Keywords

intergovernmental transfer
natural disaster
panel vector autoregression

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics

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abstract = "This paper employs panel vector autoregression to examine the dynamic fiscal response to natural disasters. With 50-state, 1970–2013 panel data on state government finance and disaster damage, we estimate disaster impacts on revenue, expenditure, debt issuance, and federal-state transfers. We find that following a disaster, states increase program expenditure and 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 ad-ditional spending is largely financed through federal transfers, which include not only disaster relief funds but also non-disaster-related public welfare assistance.",

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AB - This paper employs panel vector autoregression to examine the dynamic fiscal response to natural disasters. With 50-state, 1970–2013 panel data on state government finance and disaster damage, we estimate disaster impacts on revenue, expenditure, debt issuance, and federal-state transfers. We find that following a disaster, states increase program expenditure and 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 ad-ditional spending is largely financed through federal transfers, which include not only disaster relief funds but also non-disaster-related public welfare assistance.

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KW - natural disaster

KW - panel vector autoregression

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Measuring the Financial Shocks of Natural Disasters: A Panel Study of U.S. States

Abstract

Keywords

ASJC Scopus subject areas

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