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The dynamic effects of monsoon rainfall shocks on agricultural yield, wages, and food prices in India

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  • Björn Brey
  • Matthias S. Hertweck

Abstract

This paper shows that, first, the effects of monsoon rainfall shocks on agricultural yield in India are highly asymmetric: yield falls strongly after droughts, whereas excessive rainfall has only little effects. Second, our key novel finding is that the short‐lived yield loss after a widespread drought elicits a persistent decline (increase) in wages (food prices), which lasts for up to five years. Third, affiliation to the same National Sample Survey region (and thus to the same state) seems to be a key determinant of internal migration, whereas distance appears more relevant for food arbitrage trading.

Suggested Citation

  • Björn Brey & Matthias S. Hertweck, 2023. "The dynamic effects of monsoon rainfall shocks on agricultural yield, wages, and food prices in India," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(3), pages 616-654, July.
    • Handle: RePEc:bla:scandj:v:125:y:2023:i:3:p:616-654
    DOI: 10.1111/sjoe.12524
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    Cited by:

    1. Sajid, Osama, 2023. "Economic and Demographic Effects of Increased Flood Susceptibility: Evidence from Rural India," 2023 Annual Meeting, July 23-25, Washington D.C. 335442, Agricultural and Applied Economics Association.
    2. 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.
    3. 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 292, Banco de la Republica de Colombia.
    4. Anand Sahasranaman, 2020. "Long term dynamics of poverty transitions in India," Papers 2010.06954, arXiv.org.
    5. 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.

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    More about this item

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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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