EconPapers    
Economics at your fingertips  
 

Fair weather or foul? the macroeconomic effects of El Niño

Paul Cashin (), Kamiar Mohaddes () and Mehdi Raissi

No 239, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: This paper employs a dynamic multi-country framework to analyze the international macroeconomic transmission of El Niño weather shocks. This framework comprises 21 country/region-specific models, estimated over the period 1979Q2 to 2013Q1, and accounts for not only direct exposures of countries to El Niño shocks but also indirect effects through third-markets. We contribute to the climate-macroeconomy literature by exploiting exogenous variation in El Niño weather events over time, and their impact on different regions cross-sectionally, to causatively identify the effects of El Niño shocks on growth, inflation, energy and non-fuel commodity prices. The results show that there are considerable heterogeneities in the responses of different countries to El Niño shocks. While Australia, Chile, Indonesia, India, Japan, New Zealand and South Africa face a short-lived fall in economic activity in response to an El Niño shock, for other countries (including the United States and European region), an El Niño occurrence has a growth-enhancing effect. Furthermore, most countries in our sample experience short-run inflationary pressures as both energy and non-fuel commodity prices increase. Given these findings, macroeconomic policy formulation should take into consideration the likelihood and effects of El Niño weather episodes.

JEL-codes: C32 F44 O13 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env and nep-sea
Date: 2015-05-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26) Track citations by RSS feed

Downloads: (external link)
http://www.dallasfed.org/assets/documents/institute/wpapers/2015/0239.pdf Full text (application/pdf)

Related works:
Journal Article: Fair weather or foul? The macroeconomic effects of El Niño (2017) Downloads
Working Paper: Fair Weather or Foul? The Macroeconomic Effects of El Niño (2015) Downloads
Working Paper: Fair Weather or Foul? The Macroeconomic Effects of El Niño (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:239

Ordering information: This working paper can be ordered from

DOI: 10.24149/gwp239

Access Statistics for this paper

More papers in Globalization Institute Working Papers from Federal Reserve Bank of Dallas Contact information at EDIRC.
Bibliographic data for series maintained by Amy Chapman ().

 
Page updated 2019-10-23
Handle: RePEc:fip:feddgw:239