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: LEAD - Laboratoire d'Économie Appliquée au Développement - UTLN - Université de Toulon, UTLN - Université de Toulon
Michel Dimou: LEAD - Laboratoire d'Économie Appliquée au Développement - UTLN - Université de Toulon, UTLN - Université de Toulon

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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: Tunisia; Climate shocks; NARDL model; Climate inflation; Climate change Agriculture climate inflation NARDL Tunisia Q50 Q54 Q10 P24 C15; Climate change; Agriculture; climate inflation; NARDL; Tunisia Q50; Q54; Q10; P24; C15 (search for similar items in EconPapers)
Date: 2024-02-28
Note: View the original document on HAL open archive server: https://hal.science/hal-04985855v1
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Published in Environmental Economics and Policy Studies, 2024, ⟨10.1007/s10018-024-00398-0⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04985855

DOI: 10.1007/s10018-024-00398-0

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