The Impact of Extreme Weather Events on Budget Balances and Implications for Fiscal Policy.

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 1.1% 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 do advanced economies. Based on these findings, we discuss implications for fiscal policy and publicly-provided disaster insurance. 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 natural disasters. JEL Classification: Q54, Q58, F59, H87.Global warming, climate change, fiscal sustainability, disasters.

A Service of zbw Leibniz-Informationszentrum Wirtschaft Leibniz Information Centre for Economics Does the Financial Market Believe in the Phillips Curve? - Evidence from the G7 countries Does the Financial Market Believe in the Phillips Curve? -Evidence f

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The aim of this annual workshop is to offer a forum for young researchers from the field of International Economics to present and to discuss their current topics of research with other experts. The workshop also provides the opportunity to gain an overview of recent developments, problems and methodological approaches in this field. Terms of use: Documents in Detailed information on past workshops and the planning for the 2009 workshop are available at http://workshop-iwb.uni-goettingen.de/. Do not hesitate to contact Prof. Dr. Gerhard Rübel, cege ([email protected]) for further questions. Does the Financial Market Believe in the Phillips Curve? -Evidence from the G7 countries Ralf Fendel, a,b Eliza M. Lis, a and Jan-Christoph Rülke a,c April 2008 Preliminary Version Abstract This paper uses monthly survey data for the G7 countries for the time period 1989 -2007 to explore the link between expectations on nominal wages, prices and unemployment rate as suggested by the traditional and Samuelson-and-Solow-type Phillips curve. Three major findings stand out: First, we find that survey participants trust in the original as well as the Samuelson-and-Solow-type Phillips curve relationship. Second, we find evidence in favor of nonlinearities in the expected Samuelson-and-Solow-type Phillips curve. Third, when we take into account a kink in the expected Phillips curve indicating that the slope of the Phillips curve differs during the business cycle, we find strong evidence of this feature in the data which confirms recent theoretical discussions in the literature that the Phillips curve is flatter in case of an economic downturn. Does the Financial Market Believe in the Phillips Curve? -Evidence from the G7 countries April 2008 Abstract This paper uses monthly survey data for the G7 countries for the time period 1989 -2007 to explore the link between expectations on nominal wages, prices and unemployment rate as suggested by the traditional and Samuelson-and-Solow-type Phillips curve. Three major findings stand out: First, we find that survey participants trust in the original as well as the Samuelson-and-Solow-type Phillips curve relationship. Second, we find evidence in favor of nonlinearities in the expected Samuelson-and-Solow-type Phillips curve. Third, when we take into account a kink in the expected Phillips curve indicating that the slope of the Phillips curve differs during the business cycle, we find strong evidence of this feature in the data which confirms recent theoretical discussions in the literature that the Phillips curve is flatter in case of an economic downturn

Has the economic crisis of 2007-2009 changed the expectation formation process in the Euro area?

We use the ECB's Survey of Professional Forecaster to show that euro area expectations are consistent with standard macroeconomic building blocks such as the Phillips curve, Okun's law, and the Taylor rule. Moreover, the paper finds that the financial and economic crisis of 2007-2009 did not change the expectation formation process as professional forecasters still adopt macroeconomic building blocks for their forecast. The skepticism that has recently been raised concerning macroeconomic building blocks has apparently not yet affected professional forecasts. On the contrary, we conclude that professional forecasters still have faith in macroeconomic building blocks.Macroeconomic models Forecasting Euro area

The impact of extreme weather events on budget balances

Global warming, Climate change, Fiscal sustainability, Disasters, Q54, Q58, F59, H87,