A recent paper authored by Kensuke Molnar-Tanaka, OECD Development Centre and Hiroaki Sakamoto, Kobe University, explores how catastrophe bonds are being viewed as being more advantageous compared to taxation, when it comes to tackling the increasing rise in costs related to global natural catastrophe events.
The study, titled “Financing the costs of disasters: Catastrophe bonds or taxation?” highlights how disaster events are becoming more frequent and the economic damages that they cause are becoming more severe, and how financing these costs remains a major challenge.
Throughout the study, the authors examined two disaster financing measures: the issuance of catastrophe bonds and tax mobilisation. The authors also compared their impacts on economic welfare using a theoretical macroeconomic model.
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