Determining the Inflationary Effects of El Niño and La Niña in the Philippines

Agustin Arcenas
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Agustin Arcenas: School of Economics, University of the Philippines Diliman

No 201802, UP School of Economics Discussion Papers from University of the Philippines School of Economics

Abstract: This paper investigates whether climate "shocks" (or short-term but sharp changes in climatic conditions), El Niño and La Niña, have significant impacts on inflation in the country. Using regional panel data and information from PAGASA, this study finds that both of these weather shocks have significant effects on the general price level in the Philippines, along with interest rate, foreign exchange, and unemployment rate. Further, the results also indicate that long-term changes in climatic conditions, specifically average temperature and rainfall, do not have any significant impacts on prices. These findings are consistent with the literature that point to the fact that successful adaptation to long-term changes in climatic conditions negates any potential negative impacts to the economy. The study concludes that adaptation must be expanded not only to respond to long-term changes in climatic conditions, but also to short-term but intense changes in temperature and rainfall.

Keywords: Inflation; El Niño; La Niña; climate change (search for similar items in EconPapers)
JEL-codes: E00 Q10 Q11 Q54 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2018-04
New Economics Papers: this item is included in nep-env, nep-mac and nep-sea
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Published as UPSE Discussion Paper No. 2018-02, April 2018

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Persistent link: https://EconPapers.repec.org/RePEc:phs:dpaper:201802

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