Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/180299
Authors: 
De Winne, Jasmien
Peersman, Gert
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7037
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 price shifts. 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 are likely larger than previously thought.
Subjects: 
agricultural commodity prices
economic activity
climate change
JEL: 
E32
F44
O13
O44
Q11
Q54
Document Type: 
Working Paper

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