Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/278474 
Year of Publication: 
2023
Series/Report no.: 
ECB Working Paper No. 2798
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
This paper assesses the impact of weather shocks on inflation components in the four largest euro area economies. We combine high-frequency weather data with monthly data on inflation and output growth within a set of Bayesian Vector Autoregressions which explicitly considers the seasonal dependence of the shock. Results suggest the presence of significant country asymmetries and seasonal responses of inflation to temperature shocks, mainly via food, energy, and service prices. An increase in monthly mean temperatures has inflationary effects in summer and autumn, with a stronger response in warmer euro area countries. An increase in temperature variability has significant upward impacts on inflation rates over and above the impacts of changes in means.
Subjects: 
Temperature shocks
Climate change
Inflation
Vector Autoregression
JEL: 
Q54
E31
C32
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-5994-0
Document Type: 
Working Paper

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