Agricultural Price Shocks and Economic Activity - A Global Warning for Advanced Countries - Gert Peersman (Ghent University)

DeFiPP Seminar

Abstract: 

For a panel of 75 countries, we find that increases in global agricultural commodity prices that are caused by unfavorable harvest shocks in other regions of the world significantly curtail domestic economic activity. The effects are much larger than for average global agricultural commodity price changes. The impact is also considerably stronger in high-income countries, despite the lower shares of food in household expenditures these countries have compared to low-income countries. On the other hand, we find weaker effects in countries that are net exporters of agricultural products, have higher shares of agriculture in GDP or lower shares of non-agricultural trade in GDP; that is, characteristics that typically apply to low-income countries. When we control for these country characteristics, we find indeed that the effects on economic activity become smaller when income per capita is higher. Overall, our findings imply that the consequences of climate change on advanced economies may be larger than previously thought

 

Contact : Romain Houssa - romain.houssa@unamur.be
Télecharger : vCal