The impact of climate change on inflation in Tunisia: evidence from the asymmetric NARDL model

Oussama Zouabi () and Michel Dimou ()
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Oussama Zouabi: LAPE, University of Tunis EL Manar
Michel Dimou: LEAD, University of Toulon

Environmental Economics and Policy Studies, 2025, vol. 27, issue 4, No 6, 643-659

Abstract: Abstract This paper aims to examine the relationship between climate shocks and agri-food and overall inflation in Tunisia for the period 1985–2000. Climate shocks represent extreme weather phenomena such as droughts, heat waves, and floods To address this question, the paper uses an extensive Nonlinear Autoregressive Distributed Lag (NARDL) model that incorporates a Pesaran cointegration test, enabling the exploration of potential asymmetric effects stemming from positive and negative climate shocks on both general and agri-food inflation in the short and the long run. The key findings of the paper indicate that positive temperature shocks exert a significant inflationary impact on all agricultural products, the food industry, and, more broadly, the entire Tunisian economy, both in the short and long term. Conversely, a sudden shortage in rainfall does not significantly affect either agricultural or food prices, nor does it influence the general price index. This result is rather unexpected since long-term rainfall trends significantly affect agricultural production, emphasizing the importance of appropriate agricultural policies such as irrigation.

Keywords: Climate shocks; NARDL model; Climate inflation; Tunisia (search for similar items in EconPapers)
JEL-codes: C15 P24 Q10 Q50 Q54 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10018-024-00398-0

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