Beiträge zur Jahrestagung des Vereins für Socialpolitik 2017: Alternative Geld- und Finanzarchitekturen - Session: Development Economics A01-V1
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.