Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283249 
Year of Publication: 
2023
Series/Report no.: 
DIW Discussion Papers No. 2063
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
We study the role of international financial integration in buffering natural disaster shocks, using a large sample of advanced and emerging economies. Conditioning on such exogenous events addresses the endogeneity between financial structures and economic conditions. We document that integration improves shock absorption: output, consumption, and investment are significantly higher after a shock in states of high integration than in states of low integration. However, the benefits of international risk sharing mostly come to advanced economies. Emerging markets only profit from more integration if they have good institutions or high debt assets, whereas higher debt liabilities weaken the recovery.
Subjects: 
Financial integration
natural disasters
international risk sharing
dynamic panel model
emerging markets
JEL: 
Q54
E44
F36
F62
G11
G15
Document Type: 
Working Paper

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