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Drought-induced macroeconomic effects on China: a time-frequency domain analysis

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  • Jiana Chen

Abstract

The increasing occurrence and severity of drought under climate change pose significant challenges to China. Although there is growing literature on the economic impact of climate change, research on how drought affects the economy from a frequency domain perspective remains limited. This study empirically applies the Hilbert-Huang Transformation (HHT) and a Structural Vector Autoregressive (SVAR) model to examine the intricate relationship between extreme weather events, specifically drought, and China’s economic growth through a comprehensive time-frequency analysis. Using the HHT, we uncover the underlying periodicities within China’s GDP growth rates, systematically clarifying these into short, medium, and long-term growth cycles. Subsequent quantification with the SVAR model reveals that drought affects economic growth differently across various frequency perspectives, allowing us to discern the macroeconomic impacts of droughts over different time horizons. Droughts precipitate immediate but transient declines in short-term economic growth, while causing volatile impacts on medium-term components and more enduring effects on long-term components.

Suggested Citation

  • Jiana Chen, 2026. "Drought-induced macroeconomic effects on China: a time-frequency domain analysis," Applied Economics, Taylor & Francis Journals, vol. 58(6), pages 1077-1095, February.
    • Handle: RePEc:taf:applec:v:58:y:2026:i:6:p:1077-1095
    DOI: 10.1080/00036846.2025.2464816
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