Dickson Lim
De La Salle University, Manila
Philippinesdickson.lim@dlsu.edu.ph
Abstract:Theoretical work done on the macroeconomic impact of natural disasters has neglected the role of fiscal policyin stabilizing other sectors of the economy. Although inclusion of a public sector with a fiscal authority in macroeconomicmodels is common in the literature, most of these models assume that government expenditures are unproductive in that theydo not accrue to anyone but the government. In reality, for a model that incorporates natural disaster and foreign aid, havinga productive fiscal authority that produces public goods and services, as well as infrastructure, is necessary to capture thereal effects of foreign aid in alleviating the adverse effects of natural disaster to an economy. The study has found that fiscalpolicy can address the long-term real effects of a natural disaster shock to household consumption.
Keywords : DSGE, Natural Disasters, Fiscal Policy
