NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Economic and Policy Consequences of Catastrophes

Robert S. Pindyck, Neng Wang

NBER Working Paper No. 15373
Issued in September 2009
NBER Program(s):   EEE   EFG   PE

How likely is a catastrophic event that would substantially reduce the capital stock, GDP and wealth? How much should society be willing to pay to reduce the probability or impact of a catastrophe? We answer these questions and provide a framework for policy analysis using a general equilibrium model of production, capital accumulation, and household preferences. Calibrating the model to economic and financial data, we estimate the mean arrival rate of shocks and their size distribution, the tax on consumption society would accept to limit the maximum size of a catastrophic shock, and the cost to insure against its impact.

download in pdf format
   (310 K)

email paper

This paper is available as PDF (310 K) or via email.

This paper was revised on October 30, 2012

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15373

forthcoming at the American Economic Journal: Economic Policy

Users who downloaded this paper also downloaded these:
Pindyck w15692 Modeling the Impact of Warming in Climate Change Economics
Pindyck w15259 Uncertain Outcomes and Climate Change Policy
Barro and Jin w15247 On the Size Distribution of Macroeconomic Disasters
Pindyck w16353 Fat Tails, Thin Tails, and Climate Change Policy
Pindyck w12752 Uncertainty In Environmental Economics
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us