We investigate the macroeconomic response to natural disasters by using an endogenous business cycle (EnBC) model in which cyclical behavior arises from the investment-profit instability. Our model exhibits a larger response to natural disasters during expansions than during recessions. This apparently paradoxical result can be traced to the disasters amplifying pre-existing disequilibria during expansions, while the existence of unused resources during recessions damps the exogenous shocks. It thus appears that high-growth periods are also highly vulnerable to supply-side shocks. In our EnBC model, the average production loss due to a set of disasters distributed at random in time is highly sensitive to the dynamical characteristics of the impacted economy. Larger economic flexibility allows for a more efficient and rapid response to supply-side shocks and reduces production losses. On the other hand, too high a flexibility can lead to vulnerability phases that cause average production losses to soar. These results raise questions about the assessment of climate change damages or natural disaster losses that are based purely on long-term growth models.

# Dynamical systems

Natural disasters impacting a macroeconomic model with endogenous dynamics. Ecological Economics. 2008;68 (1-2) :582–592.Abstract

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Data assimilation with an extended Kalman filter for impact-produced shock-wave dynamics. Journal of Computational Physics. 2004;196 (2) :705–723.

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Turbulence and Predictability in Geophysical Fluid Dynamics and Climate Dynamics. North-Holland Publ. Co., Amsterdam/New York; 1985 pp. 449.

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Dynamical origin of low-frequency variability in a highly nonlinear midlatitude coupled model. Journal of Climate. 2006;19 (24).Abstract

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Successive refinements in long-term integrations of planetary orbits. The Astrophysical Journal. 2003;592 (1) :620.

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Approximation of Stochastic Invariant Manifolds: Stochastic Manifolds for Nonlinear SPDEs I. New York: Springer Briefs in Mathematics, Springer; 2015. Publisher's VersionAbstract

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Successive bifurcations in a simple model of atmospheric zonal-flow vacillation. Chaos: An Interdisciplinary Journal of Nonlinear Science. 2002;12 (2) :300–309.

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Boolean delay equations on networks in economics and the geosciences. International Journal of Bifurcation and Chaos. 2011;21 (12) :3511–3548.

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Understanding ENSO variability and its extrema: A delay differential equation approach. In: Extreme Events: Observations, Modeling and Economics. American Geophysical Union & Wiley ; 2015. pp. 63–78.Abstract

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Dynamic Meteorology: Data Assimilation Methods. In: Applied Mathematical Sciences. Vol. 36. Dynamic Meteorology - Data Assimilation Methods. Springer-Verlag ; 1981. pp. 139–224.

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A Boolean delay equation model of colliding cascades. Part II: Prediction of critical transitions. Journal of Statistical Physics. 2003;111 (3-4) :839–861.

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Asymptotics of the Coleman-Gurtin model. Discrete and Continuous Dynamical Systems - Series S. 2011;4 (2) :351–369.

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Predicting stochastic systems by noise sampling, and application to the El Niño-Southern Oscillation. Proceedings of the National Academy of Sciences. 2011;108 (29) :11766–11771.Abstract

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Does reaction-diffusion support the duality of fragmentation effect?. Ecological Complexity. 2010;7 (1) :100–106.

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Geophysical flows as dynamical systems: the influence of Hide's experiments. Astronomy & Geophysics. 2010;51 (4) :4–28.

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