Disasters are becoming more frequent and the economic damages they cause are becoming more severe. The associated costs have grown continuously over the last 60 years, and financing these costs remains a major challenge. Both broadening disaster risk financing options and formulating an effective policy mix of different financial tools have become increasingly important. This paper examines two disaster risk financing tools: catastrophe bonds and taxation, based on a macroeconomic theoretical approach. The results suggest that as far as welfare is concerned, catastrophe bond options are comparatively advantageous […]