The purpose of this study is to examine the impact of natural disasters on emergency and disaster relief service (EDRS) expenditure in the governmental funds for sixty-six counties in the state of Florida between 2009 and 2013. Specifically, it will explore whether the fiscal responses of local governments in these fiscal accounts are spatially dependent by using the spatial Durbin model. It finds that EDRS expenditures in the general fund and in the special revenue fund of one county are influenced by the levels of damage in neighboring counties. This study also finds a spillover effect of intergovernmental revenues from state and federal governments on these EDRS expenditures in fiscal accounts. These results suggest that the provision of public goods (such as disaster relief activities) may generate spatial spillover at the local level in the context of US federalism. Moreover, this study highlights the importance of accounting for spatial factors in the study with respect to local jurisdictions’ fiscal reactions to natural disasters.
AcevedoS.2014. “Debt, Growth and Natural Disasters: A Caribbean Trilogy.” IMF Working Paper, WP/14/125, International Monetary Fund, Washington, DC.
2.
Albala-BertrandJ.1993. “Natural Disaster Situations and Growth: A Macroeconomic Model for Sudden Disaster Impacts.” World Development21 (9): 1417–34.
3.
AnselinLuc. 1988. Spatial Econometrics: Methods and Models. Dordrecht, the Netherlands: Kluwer Academic.
4.
BarroRobert J.2006. “On the Welfare Cost of Consumption Uncertainty.” NBER Working Paper No. 12763, National Bureau of Economic Research, Cambridge, MA.
5.
BensonCharlotteClayEdward J.. 2004. “Understanding the Economic and Financial Impacts of Natural Disasters.” Disaster Risk Management Series No. 4, The World Bank, Washington, DC.
6.
BesleyTimothyCaseAnne C.. 1995. “Incumbent Behavior: Vote Seeking, Tax Setting and Yardstick Competition.” American Economic Review85:25–45.
7.
BotzenW.J. WouterDeschenesOlivierSandersMark. 2019. “The Economic Impacts of Natural Disasters: A Review of Models and Empirical Studies.“ Review of Environmental Economics and Policy13 (2): 167–88.
8.
BorenszteinE.CavalloE.ValenzuelaP.. 2009. “Debt Sustainability under Catastrophic Risk: The Case for Government Budget Insurance.” Risk Management and Insurance Review12 (2): 273–94.
9.
BotzenW. J. WouterDeschenesOlivierSandersMark. 2019. “The Economic Impacts of Natural Disasters: A Review of Models and Empirical Studies.” Review of Environmental Economics and Policy13 (2): 167–88.
10.
BruecknerJ. K.2003. “Strategic Interaction among Governments: An Overview of Empirical Studies.” International Regional Science Review26 (2): 175–88.
11.
CapelloR.2015. Regional Economics, 2nd ed. New York: Routledge.
12.
CaseA. C.RosenH. S.HinesJ. R.. 1993. “Budget Spillovers and Fiscal Policy Interdependence: Evidence from the States.” Journal of Public Economics52:285–307.
13.
CavalloE.GalianiS.NoyI.PantanoJ.. 2013. “Catastrophic Natural Disasters and Economic Growth.” Review of Economics and Statistics95 (5): 1549–61.
14.
ChenGang. 2020. “Assessing the Financial Impact of Natural Disasters on Local Governments.” Public Budgeting & Finance40 (1): 22–44.
DowntonMary W.PielkeRoger A.. Jr. 2001. “Discretion without Accountability: Politics, Flood Damage, and Climate.” Natural Hazards Review2 (4): 157–66.
17.
ElhorstJ. P.2010. “Spatial Panel Data.” In Handbook of Applied Spatial Analysis, edited by FischerM. M.GetisA., 377–407. Berlin, Germany: Springer.
18.
ElhorstJ. P.2012. “Dynamic Spatial Panels: Models, Methods, and Inference.” Journal of Geographical Systems14:5–28.
19.
EscalerasMonicaRegisterCharles A.. 2012. “Fiscal Decentralization and Natural Hazard Risk.” Public Choice151:165–83.
20.
FanninJ. MatthewDetreJohn D.. 2012. “Red Light Ahead: Preparing Local Governments Financially for the Next Disaster.” Choices27 (1): 1–7.
21.
FelbermayrG.GröschlJ.. 2014. “Naturally Negative: The Growth Effects of Natural Disasters.” Journal of Development Economics111:92–106.
22.
FloraxR. J. G. M.FolmerH.ReyS. J.. 2003. “Specification Searches in Spatial Econometrics: The Relevance of Hendry’s Methodology.” Regional Science and Urban Economics33 (5): 557–79.
23.
FombyT.IkedaY.LoayzaN.. 2013. “The Growth Aftermath of Natural Disasters.” Journal of Applied Econometrics28 (3): 421–34.
24.
GarrettThomas A.SobelRussel S.. 2003. “The Political Economy of FEMA Disaster Payments.” Economic Inquiry41 (3): 496–509.
25.
GoodspeedTimothy. 2015. “Decentralization and Natural Disasters.” In Handbook of Multilevel Finance, edited by AhmadEhtishamBrosioGiorgio, 567–84. Camberley, UK: Edward Elgar Press.
26.
GuoHaiWangWen. 2017. “A Spatial Analysis of Florida County Governments’ Unreserved General Fund Balances.” Public Budgeting & Finance37 (3): 71–88.
27.
HallJoshua C.RossJustin M.. 2010. “Tiebout Competition, Yardstick Competition, and Tax Instrument Choice: Evidence from Ohio School Districts.” Public Finance Review38 (6): 710–37.
28.
HeipertzM.NickelC.. 2008. “Climate Change Brings Stormy Days: Case Studies on the Impact of Extreme Weather Events on Public Finances.” Fiscal Sustainability, Analytical Developments and Emerging Policy Issues, Proceedings of the Workshop in Public Finances of the Banca d’Italia, Perugia, Italy.
29.
HildrethBartley W.2009. “The Financial Logistics of Disaster: The Case of Hurricane Katrina.” Public Performance & Management Review32 (3): 400–36.
30.
HirschmanAlbert O.1970. Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Cambridge, MA: Harvard University Press.
31.
HustedThomasNickersonDavid. 2014. “Political Economy of Presidential Disaster Declarations and Federal Disaster Assistance.” Public Finance Review42 (1): 35–57.
32.
KelejianH. H.RobinsonD.. 1993. “A Suggested Method of Estimation for Spatial Interdependent Models with Autocorrelated Errors, and an Application to a County Expenditure Model.” Papers in Regional Science72:297–312.
33.
KrugmanP.2011. “The New Economic Geography, Now Middle-aged.” Regional Studies45:1–7.
34.
LaddHelen F.1992. “Mimicking of Local Tax Burdens among Neighboring Counties.” Public Finance Quarterly20 (4): 450–67.
35.
LeSageJames P.DominguezMatthew. 2012. “The Importance of Modeling Spatial Spillovers in Public Choice Analysis.” Public Choice150:525–45.
36.
LeSageJames P.Kelly PaceR.. 2009. Introduction to Spatial Econometrics. Boca Raton, FL: Taylor & Francis Group.
37.
LisEliza M.NickelChristiane. 2010. “The Impact of Extreme Weather Events on Budget Balances.” International Tax and Public Finance17:378–99.
38.
LoayzaNormanOlaberríaEduardoRigoliniJameleChristiansenLuc. 2012. “Natural Disasters and Growth: Going beyond the Averages.” World Development40 (7): 1317–36.
39.
MeleckyMartinRaddatzClaudio. 2015. “Fiscal Responses after Catastrophes and the Enabling Role of Financial Development.” World Bank Economic Review29 (1): 129–49.
40.
MiaoQingChenCanYuLuAbrigoMichael. 2020. “Natural Disasters and Financial Implications for Subnational Governments: Evidence from China.” Public Finance Review48 (1): 72–101.
41.
MiaoQingHouYilinAbrigoMichael. 2018. “Measuring the Financial Shocks of Natural Disasters: A Panel Study of U.S. States.” National Tax Journal71 (1): 11–44.
42.
MurdochJ. C.RahmatianM.ThayerM.. 1993. “A Spatially Autoregressive Median Voter Model of Recreation Expenditures.” Public Finance Quarterly21:334–50.
43.
NoyIlan. 2009. “The Macroeconomic Consequences of Disasters.” Journal of Development Economics88:221–31.
44.
NoyIlanNualsriAekkanush. 2011. “Fiscal Storms: Public Spending and Revenues in the Aftermath of Natural Disasters.” Environment and Development Economics16 (1): 113–28.
45.
OatesW.1972. Fiscal Federalism. New York: Harcourt-Brace.
46.
OjedeAndrewAtemsBebonchuYamarikSteven. 2018. “The Direct and Indirect (Spillover) Effects of Productive Government Spending on State Economic Growth.” Growth and Change49 (1): 122–41.
47.
OuattaraBazoumanaStroblEric. 2013. “The Fiscal Implications of Hurricane Strikes in the Caribbean.” Ecological Economics85:105–15.
48.
QianYingyiWeingastBarry R.. 1997. “Federalism as a Commitment to Reserving Market Incentives.” Journal of Economic Perspectives11 (4): 83–92.
49.
PhaupMarvinKirschnerCharlotte. 2010. “Budgeting for Disasters: Focusing on the Good Times.” OECD Journal on Budgeting10:1–22.
50.
RaddatzClaudio. 2007. “Are External Shocks Responsible for the Instability of Output in Low-income Countries?” Journal of Development Economics84:155–87.
51.
RaddatzClaudio.2009. “The Wrath of God Macroeconomic Costs of Natural Disasters.” World Bank Policy Research Working Paper No. 5039, World Bank, Washington, DC.
52.
RasmussenT. N.2004. “Macroeconomic Implications of Natural Disasters in the Caribbean.” IMF Working Paper WP/04/224, International Monetary Fund, Washington, DC.
53.
SchuknechtLudger. 1999. “Fiscal Policy Cycles and the Exchange Rate Regime in Developing Countries.” European Journal of Political Economy15 (3): 569–580.
54.
Segura IIIJerome. 2017. “The Effect of State and Local Taxes on Economic Growth: A Spatial Dynamic Panel Approach.” Papers in Regional Science96 (3): 627–645.
SobelRussellDeanAndrea. 2008. “Has Wal-mart Buried Mom and Pop? The Impact of Wal-mart on Self-employment and Small Establishments in the United States.” Economic Inquiry46:676–95.
57.
StroblEric. 2011. “The Economic Growth Impact of Hurricane Strikes: Evidence from US Coastal Counties.” Review of Economics and Statistics93:575–89.
58.
TieboutCharles. 1956. “A Pure Theory of Local Expenditures.” Journal of Political Economy64:416–24.
59.
YuNannanJongMartin deStormServaasMiJianing. 2013. “Spatial Spillover Effects of Transport Infrastructure: Evidence from Chinese Regions.” Journal of Transport Geography28:56–66.
60.
World Bank Group. 2014. “Financial Protection Against Natural Disasters : An Operational Framework for Disaster Risk Financing and Insurance.” Washington, DC. https://openknowledge.worldbank.org/handle/10986/21725License: CC BY 3.0 IGO.
