Federal Disaster Relief and Local Government Financial Condition

August 1993 (VOL. 11, NO. 2)

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Federal relief for local governments following natural disasters is provided under the assumption that without aid disasters may overwhelm local resources thus slowing recovery. Using loss data for a sample of counties experiencing disasters in the mid-1980s, this paper provides evidence that changes in the financial condition of local governments was not improved by receiving federal aid. Additionally, the paper shows that the initial financial impacts of disasters may be negative, but that within two years the net effect is positive.