I investigate how natural disaster can exacerbate fiscal vulnerabilities and trigger sovereign defaults. I extend a … standard sovereign default model to include disaster risk and calibrate it to a sample of seven Caribbean countries that are … further restrict market access. Next, I show that "disaster clauses", that provide debt-servicing relief, improve government …

defaulting – is decreasing and highly nonlinear in the probability of disaster. The model emphasizes the crucial role of the … perception of disaster risk, independently from the realizations of disasters. Different perceptions of disaster risk may have … very different implications for sovereign default risk. A perception of disaster risk based on a constant disaster …

This paper proposes a framework for ex ante evaluation of sovereign disaster risk finance instruments available to … governments for funding disaster losses. The framework can be used by governments to help choose between different financial … disaster losses, taking into account the risk of disasters, economic conditions, and political constraints. The paper discusses …