MONETARY POLICY UNCERTAINTY AND AGRICULTURAL CLIMATE RISK: DOES THE AGRICULTURAL KUZNETS CURVE EXIST?

Chien-Chiang Lee (), Farzan Yahya () and Md Reza Sultanuzzaman ()
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Farzan Yahya: Institute of Technology, Nanchang, China
Md Reza Sultanuzzaman: Nanchang Institute of Technology, Nanchang, China

Bulletin of Monetary Economics and Banking, 2024, vol. 27, issue 4, 631-654

Abstract: This study explores the impact of Monetary Policy Uncertainty (MPU) on Agricultural Climate Risk (AGCR) in China, particularly in light of recent climate vulnerabilities in the agricultural sector, highlighted by recent floods. Using balanced panel data from 31 provinces between 2010 and 2022, diagnostic tests confirm cross-sectional dependence and slope heterogeneity, and the Westerlund cointegration test indicates a long-term relationship among variables. Results from generalized panel quantile regression show that MPU positively affects AGCR, especially at lower quantiles, but this effect can be moderated by agricultural insurance. The findings also confirm an agricultural Kuznets curve, where agricultural productivity initially increases AGCR before reaching a turning point that reduces it. Furthermore, a unidirectional causality flows from MPU to AGCR, while a bidirectional causality exists between AGCR and productivity, underscoring the need for targeted resilience strategies for vulnerable provinces.

Keywords: Agricultural climate risk; Monetary policy uncertainty; Agricultural Kuznets curve; Panel quantile regression; Westerlund cointegration (search for similar items in EconPapers)
JEL-codes: G18 G20 H26 H32 O16 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:27:y:2024:i:4c:p:631-654

DOI: 10.59091/2460-9196.2419

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