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Debt Sustainability under Catastrophic Risk :, The Case for Government Budget Insurance, Eduardo Cavallo, Eduardo Borensztein, Patricio Valenzuela

Natural disasters are an important source of vulnerability in the Caribbean region. Despite being one of the more disaster-prone areas of the world, it has one of the lowest levels of insurance coverage. This paper examines the vulnerability of Belize's public finance to the occurrence of hurricanes and the potential impact of insurance instruments in reducing that vulnerability. The paper finds that catastrophic risk insurance significantly improves Belize's debt sustainability. In addition, the methodology employed makes it possible to estimate the appropriate level of insurance, which for the case of Belize is a maximum coverage of US$120 million per year
Table Of Contents
Contents; I. Introduction; II. Debt Dynamics and Catastrophic Risk: The Case of Belize; Figures; 1. Bilateral and Multilateral Aid Flows to Belize 1970-2003; III. Instruments for Catastrophic Insurance; IV. Disaster Insurance and Debt Sustainability; Tables; 1. Forecast and Standard Deviations; 2. Probability Distribution and Cost of Hurricanes by Category; 3. Cost of Hurricane Insurance; 2. Debt Sustainability Analysis (DSA): Fan 1; 4. Optimal Insurance; A. Indirect Gains from Disaster Insurance; 5. Wind Storms and Emerging Market Spreads; 3. Debt Sustainability Analysis (DSA): Fan 2
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (28 p.)
Specific Material Designation
Form Of Item

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