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The Persistent Effects of Monsoon Rainfall Shocks in India: A Nonlinear VAR Approach

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  • Hertweck, Matthias
  • Brey, Bjoern
Abstract
We examine the effects of monsoon rainfall shocks on agricultural output, wages, and prices in India. The effects are highly asymmetric: agricultural output falls by 16% after a negative shock, but a positive shock has no significant effects. Although the drop in agricultural output is very short-lived, it elicits a persistent decline (increase) in wages (food prices). This indicates that famines are caused by a persistent disruption in food acquisition, rather than by a shortage in food supply.

Suggested Citation

  • Hertweck, Matthias & Brey, Bjoern, 2017. "The Persistent Effects of Monsoon Rainfall Shocks in India: A Nonlinear VAR Approach," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168256, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc17:168256
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    Cited by:

    1. Camilo Bohorquez-Penuela & Andrea Otero-Cortes, 2020. "Blame it on the Rain: The Effects of Weather Shocks on Formal Rural Employment in Colombia," Documentos de Trabajo Sobre Economía Regional y Urbana 18404, Banco de la República, Economía Regional.
    2. Bohorquez-Penuela, Camilo, 2021. "Weather Shocks and Agricultural Credit in Developing Countries: Evidence from a Second-Floor Institution," 2021 Annual Meeting, August 1-3, Austin, Texas 313994, Agricultural and Applied Economics Association.
    3. Patrick Blagrave, 2020. "Inflation co-movement in emerging and developing Asia: the monsoon effect," Applied Economics Letters, Taylor & Francis Journals, vol. 27(15), pages 1277-1283, September.
    4. repec:ags:aaea22:335442 is not listed on IDEAS
    5. Anand Sahasranaman, 2020. "Long term dynamics of poverty transitions in India," Papers 2010.06954, arXiv.org.

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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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