Weather Shocks Affect Trade Policy:Evidence from Preferential Trade Agreements

Giorgio Chiovelli (), Francesco Amodio, Leonardo Baccini and Michele Di Maio

No 2401, Documentos de Trabajo/Working Papers from Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo.

Abstract: We show that weather shocks affect government trade policy decisions. We exploit variation in rainfall during the growing season within and across countries to show that weather shocks impact agricultural output and trade. Using information on tariff cuts by commodity from preferential trade agreements, we then show that weather shocks that happen during the negotiation period correlate strongly with the size of tariff cuts. When weather shocks increase (decrease) a country’s capacity to produce a given crop, its government negotiates a smaller (larger) tariff cut. These results are consistent with a political economy trade model with sector-specific inputs in which the government places more weight on producers relative to consumers in its objective function. They also reveal that governments update their beliefs about domestic agricultural production capacity in response to weather shocks.

Keywords: weather shocks; climate change; agricultural trade; trade policy. (search for similar items in EconPapers)
JEL-codes: F13 F14 Q17 Q54 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www2.um.edu.uy/fcee_papers/2020/Weather_Sh ... Trade_Agreements.pdf

Related works:
Journal Article: Weather shocks affect trade policy: Evidence from preferential trade agreements (2025)
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:mnt:wpaper:2401

Access Statistics for this paper

More papers in Documentos de Trabajo/Working Papers from Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo. Contact information at EDIRC.
Bibliographic data for series maintained by Juan Briozzo ().