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 language | English |
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Pages (from-to) | 1327–1342 |
Number of pages | 16 |
Journal | The Economic Journal |
Volume | 129 |
Issue number | 619 |
Early online date | 22 May 2018 |
DOIs | |
Publication status | Published - 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