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Understanding the Macroeconomic Effects of Climatic Disasters: Implications for Economic Development and Resilience

Szalapska, Aleksandra LU (2026) EKHS42 20261
Department of Economic History
Abstract
This thesis estimates the dynamic macroeconomic effects of climatic disasters on GDP per capita and human capital, using local projections on a panel of 173 countries from 1970 to 2022. The analysis focuses on droughts, floods, and storms, three unambiguously climate-driven disaster types. The main finding is a divergence between output and human capital responses. GDP per capita rises cumulatively after climatic shocks in both income groups, consistent with reconstruction-driven demand effects, while human capital declines in lower-income countries in the years immediately following shocks. Foreign aid is associated with a weaker GDP per capita response but a smaller human capital decline in lower-income countries, suggesting aid... (More)
This thesis estimates the dynamic macroeconomic effects of climatic disasters on GDP per capita and human capital, using local projections on a panel of 173 countries from 1970 to 2022. The analysis focuses on droughts, floods, and storms, three unambiguously climate-driven disaster types. The main finding is a divergence between output and human capital responses. GDP per capita rises cumulatively after climatic shocks in both income groups, consistent with reconstruction-driven demand effects, while human capital declines in lower-income countries in the years immediately following shocks. Foreign aid is associated with a weaker GDP per capita response but a smaller human capital decline in lower-income countries, suggesting aid prioritises humanitarian objectives over productive investment. Evidence on domestic credit and remittances is mixed. The results underscore that short-run GDP recovery can mask slower-moving human capital losses, and that adaptation policies must distinguish reconstruction spending from genuine welfare gains. (Less)
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author
Szalapska, Aleksandra LU
supervisor
organization
course
EKHS42 20261
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Climate Shocks, Economic Growth, Human Capital, Local Projections, Income Heterogeneity
language
English
id
9246458
date added to LUP
2026-09-07 15:58:54
date last changed
2026-09-07 15:58:54
@misc{9246458,
  abstract     = {{This thesis estimates the dynamic macroeconomic effects of climatic disasters on GDP per capita and human capital, using local projections on a panel of 173 countries from 1970 to 2022. The analysis focuses on droughts, floods, and storms, three unambiguously climate-driven disaster types. The main finding is a divergence between output and human capital responses. GDP per capita rises cumulatively after climatic shocks in both income groups, consistent with reconstruction-driven demand effects, while human capital declines in lower-income countries in the years immediately following shocks. Foreign aid is associated with a weaker GDP per capita response but a smaller human capital decline in lower-income countries, suggesting aid prioritises humanitarian objectives over productive investment. Evidence on domestic credit and remittances is mixed. The results underscore that short-run GDP recovery can mask slower-moving human capital losses, and that adaptation policies must distinguish reconstruction spending from genuine welfare gains.}},
  author       = {{Szalapska, Aleksandra}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Understanding the Macroeconomic Effects of Climatic Disasters: Implications for Economic Development and Resilience}},
  year         = {{2026}},
}