The price impact of extreme weather in developing countries

Andréas Heinen*, Jeetendra Khadan, Eric Strobl

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

33 Citations (Scopus)
799 Downloads (Pure)

Abstract

We examine the impact of extreme weather on consumer prices in developing countries by constructing a monthly data set of potential hurricane and flood destruction indices and linking these with consumer price data for 15 Caribbean islands. Our econometric model shows that the price impact of extreme weather events can be large. To illustrate potential welfare losses due to these price effects, we combine our estimates with price elasticities obtained from a demand system and with event probabilities for Jamaica. Our results show that while expected monthly losses are small, rare events can cause large falls in monthly welfare due to price increases.
Original languageEnglish
Pages (from-to)1327–1342
Number of pages16
JournalThe Economic Journal
Volume129
Issue number619
Early online date22 May 2018
DOIs
Publication statusPublished - Apr 2019

Bibliographical note

Funding Information:
We thank participants at the SALISES conference, the University of Heidelberg and the University of Birmingham. This research has been conducted as part of the project Labex MME-DII (ANR11-LBX-0023-01). Andréas Heinen acknowledges the support of the French Agence Nationale de la Recherche (ANR), under grant ANR-17-CE26-0001 (project BREAKRISK). The usual disclaimers apply.

Publisher Copyright:
© 2018 Royal Economic Society.

ASJC Scopus subject areas

  • Economics and Econometrics

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