Abstract
ABSTRACT Countries in Southeast Asia are highly exposed to disasters and the exposure is increasing in recent years. Capital accumulation is one of the important factors as a buffer to shocks of disasters. We examine the impact of disasters on capital accumulation in selected Southeast Asian countries, using a dynamic stochastic general equilibrium (DSGE) approach. The result shows that frequent disasters lower the long-term capital stock. This paper also discusses policy measures of promoting capital accumulation and compare two policy options: i) providing subsidies to incentivize further investment; and ii) encouraging competition and concludes that a competitive environment will be critical to strengthen capital accumulation against disasters.
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