The Relationship Between Natural Disasters, Real Economic Growth, and Public Debt: Cross-Country Empirical Evidence

This study aims to examine the effects of natural disaster damage and real economic growth on the general government's gross debt using empirical evidence from 48 countries. The Two-Stage System Generalised Moments (GMM) method was applied for the period 1965–2024 using five-year data. The empirical findings show that an increase in real economic growth statistically significantly reduces the general government's gross debt level. In contrast, an increase in natural disaster damage statistically significantly increases the general government's gross debt level. It was found that the first lag of the general government's gross debt had an increasing effect on the current debt level.