Introduction to weather extremes and monetary policy

Pablo Garcia Sanchez

No 163, BCL working papers from Central Bank of Luxembourg

Abstract: I begin this note by reviewing the economic effects of past weather shocks. I explore the empirical literature and present three case studies: the fall of the Roman Empire, the French Revolution of 1848, and Kansas in the 1880s. The second part of the note discusses how more frequent and severe weather extremes could risk price stability, and offers some thoughts on the modelling of weather shocks, a crucial step in designing good monetary policy. My main message is this: even in wealthy economies, weather events will affect central banks’ ability to achieve their primary goal - keeping prices in check.

Keywords: Extreme Weather Events; Climate Change (search for similar items in EconPapers)
JEL-codes: A10 Q01 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2022-08
New Economics Papers: this item is included in nep-ban, nep-cba, nep-env and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:bcl:bclwop:bclwp163

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