Working Paper Series: Special Edition of 2016 to 2018 Interns

Natural Disasters, Growth and Debt Sustainability: A Critical Analysis of the ECCU

BY

Ms Tonya Da Silva

University of the West Indies

Cave Hill Campus

Abstract The aim of this empirical study is to examine the impact of natural disasters on economic growth in the ECCU countries. Two random effects panel data models are used to ascertain the relationship over the period 1980-2016. In addition, the paper utilises the Debt Sustainability Analysis Framework to investigate the potential impact of natural disasters on the debt sustainability of the countries over the medium term. Overall, the findings show that economic growth is significantly affected by intense natural disasters with growth being impacted in the order of 2.8 percentage points. Furthermore, the results of the DSA indicate that the countries would face difficulties to reach their debt target by 2030 if they were hit by an intense natural disaster as early as 2018.

Key Words: Natural Disasters, Growth, Debt Sustainability

JEL Classification: Q54, O44, H63

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