The Fiscal Shocks of Natural Disasters: A Meta-Analysis

Abstract

The increasing frequency and severity of natural disasters pose mounting challenges to the long-term fiscal sustainability of governments. Yet empirical evidence on the fiscal impacts of natural disasters remains fragmented and inconclusive. This study presents the first comprehensive meta-analysis of the fiscal effects of natural disasters, synthesizing 1,438 effect sizes from 43 empirical studies. We estimate both the overall average effect and disaggregated impacts across key fiscal outcomes. The results show that natural disasters have a statistically significant negative overall effect on public finances, driven primarily by increased government expenditures, alongside an increase in intergovernmental transfers and a decline in debt levels. However, average effects on own-source revenues and budget balances are not statistically significant. The meta-analysis further uncovers substantial heterogeneity in estimated effects depending on the types of fiscal outcomes, disaster measurement approaches, and econometric model specifications. These findings underscore the importance of building disaster-resilient public financial management systems.