Consumption response to a natural disaster: Evidence of price and income shocks from Chennai flood

Sumit Agarwal, Pulak Ghosh and Huanhuan Zheng

Energy Economics, 2024, vol. 131, issue C

Abstract: We utilize monthly individual-level financial data and item-level supermarket sales data to study how consumption responds to one of the costliest natural disasters in India. We find that consumption dropped by 11% during the disaster, 65% of which was recovered after the disaster. On average, consumption per capita dropped by $312 per year, which costs about 5% of the GDP. We also show that natural disasters depressed consumption through income shocks instead of price shocks. Consumers smooth consumption using credit card, banks loans and wealth in coping with the shocks.

Keywords: Natural disaster; Income shocks; Price shocks; Online shopping; Household finance (search for similar items in EconPapers)
JEL-codes: G51 Q54 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:131:y:2024:i:c:s0140988324000318

DOI: 10.1016/j.eneco.2024.107323

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