Dynamic Effects of Weather Shocks on Production in European Economies

Daniele Colombo and Laurent Ferrara

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: This paper evaluates the dynamic impact of weather shocks on economic activity in the three main European countries—Germany, France, and Italy. To capture meaningful variations in weather patterns, we propose a novel monthly Composite Weather Index (CWI). This index incorporates relevant information of five weather-specific shocks: heat, cold, drought, precipitation, and winds. We estimate a series of country-specific Bayesian Structural Vector Autoregressive models to assess the effects of weather shocks on distinct production sectors, including energy, construction, manufacturing, and services, as well as sectoral prices. The findings reveal evidence of both direct and indirect significant impacts of weather shocks on economic activity in Europe, with each component of the CWI exerting heterogeneous effects across different countries and production sectors.

Keywords: weather shocks; European production; Bayesian SVAR (search for similar items in EconPapers)
JEL-codes: C32 E23 Q54 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2024-01, Revised 2024-08
New Economics Papers: this item is included in nep-eec, nep-env and nep-eur
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https://cama.crawford.anu.edu.au/sites/default/fil ... ised_august_2024.pdf Revised Version (application/pdf)
https://cama.crawford.anu.edu.au/sites/default/fil ... nal_january_2024.pdf Original Version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2024-07

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