Addressing the effects of meteorological disasters on public debt: A focus on Middle-income economies in the Asian region

Date : Jeudi | 2023-09-28 à 12h30
Lieu : Salle des thèses

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Sarah POUEY (LEO, Université d’Orléans)

Exacerbation of extreme weather events by climate change provoked a recent surge in scientific papers examining their consequences. The present article contributes to the literature by investigating the potential effects of meteorological disasters on public debt in middle- income countries. Rising debt may limit the ability of emerging countries to cope with unanticipated crisis and prevent their ability to develop, therefore it is crucial to understand the effects of disasters on public debt and its components. Our empirical analysis includes disaster data from the CRED and gross public debt extracted from the WEO. We employ a local projection estimator on a sample of 18 middle-income countries in Asia that have experienced frequent exposure to severe weather events between 2002 and 2019. Although results do not exhibit significant effects of meteorological disasters on debt variation when we consider all the events, we find negative, significant, and robust effects of extreme meteorological events on debt variation when focusing on the 15% deadliest events. Our findings suggest that countries frequently exposed to disasters have been able to limit sovereign debt growth because of external funding.