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As countries grapple with the aftermath of climate-related disasters, the disruptions they inflict on domestic consumption ripple through the fabric of income and price level shocks. The income shock emanates from the adverse effects of such disasters on economic agents, leading to both wage and asset income losses. On the other hand, the destruction of productive capacity and the disruption of supply chains by climatic disasters generate a price level shock. To delve deeper into these channels, this paper builds a novel climate economy model using nonlinear model predictive control. Moreover, using time-series analysis for Bangladesh, the study uncovers compelling evidence of the existence of income and price channels through which climatic disasters impact consumption where the price effect has appeared stronger than the income effect. The findings suggest that policymakers should simultaneously prioritize income-generating and price-supporting initiatives after climate-related disasters to achieve a rapid and sustainable consumption recovery to match or surpass the predisaster level.

There has been an explosion in the amount of parts and components traded within East Asian production networks. The People's Republic of China (PRC) has emerged as the final assembly point for the goods produced. These goods then flow primarily outside of the region. When the global financial crisis (GFC) occurred, the decrease in Western demand led to a synchronized decline in Asian exports. If more final goods could flow to Asian consumers, it would provide insurance against another slowdown in the rest of the world. This paper uses a gravity model to investigate if emerging Asia is importing fewer consumption goods than predicted. The results indicate that since the GFC, the PRC and the Association of Southeast Asian Nations (ASEAN) have imported more final goods than expected. Nevertheless, their consumption imports per capita are orders of magnitude lower than those of developed economies. This highlights the need for further growth in emerging Asia.