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International Tax and Public Finance

, Volume 17, Issue 4, pp 378–399 | Cite as

The impact of extreme weather events on budget balances

  • Eliza M. LisEmail author
  • Christiane Nickel
Article

Abstract

This paper explores implications of climate change for fiscal policy by assessing the impact of large scale extreme weather events on changes in public budgets. We apply alternative measures for large scale extreme weather events and conclude that the budgetary impact of such events ranges between 0.23% and 1.4% of GDP depending on the country group. Developing countries face a much larger effect on changes in budget balances following an extreme weather event than advanced economies. Based on these findings, our policy conclusions point to the enhanced need to reach and maintain sound fiscal positions given that climate change is expected to cause an increase in the frequency and severity of extreme weather events.

Keywords

Global warming Climate change Fiscal sustainability Disasters 

JEL Classification

Q54 Q58 F59 H87 

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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Chair of MacroeconomicsWHU – Otto Beisheim School of ManagementVallendarGermany
  2. 2.European Central BankFrankfurt am MainGermany
  3. 3.Center for European StudiesWHU – Otto Beisheim School of ManagementVallendarGermany

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