IDEAS home Printed from https://ideas.repec.org/p/bdm/wpaper/2021-24.html

The effect of tropical cyclones on economic activities: micro level evidence from Mexico for secondary and tertiary activities

Author

Listed:
  • Juárez-Torres Miriam
  • Puigvert Jonathan

Abstract

This paper explores the effects of tropical cyclones on the economic activity of establishments in the manufacturing and service sectors in Mexico. The analysis relies on panel data that combines establishment-level economic activity with municipal-level exposure to tropical cyclones on a monthly basis to estimate an augmented distributed lag model. Results show that, after a tropical cyclone, the average manufacturing establishment experiences a short-term and small negative effect on production growth. For establishments in the service sector, the effect is small and negative on revenue growth, while positive, higher in magnitude, and more persistent on growth of operative expenditures. The disaggregated data allows for the analysis of the heterogeneity of the effects between manufacturing and services sectors.

Suggested Citation

  • Juárez-Torres Miriam & Puigvert Jonathan, 2021. "The effect of tropical cyclones on economic activities: micro level evidence from Mexico for secondary and tertiary activities," Working Papers 2021-24, Banco de México.
    • Handle: RePEc:bdm:wpaper:2021-24
    as

    Download full text from publisher

    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7B4628B140-4A10-97BB-E68D-B9F1402C167E%7D.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Katrina Jessoe & Dale T. Manning & J. Edward Taylor, 2018. "Climate Change and Labour Allocation in Rural Mexico: Evidence from Annual Fluctuations in Weather," Economic Journal, Royal Economic Society, vol. 128(608), pages 230-261.
    2. Kerry Emanuel, 2005. "Increasing destructiveness of tropical cyclones over the past 30 years," Nature, Nature, vol. 436(7051), pages 686-688, August.
    3. Krichene, H. & Geiger, T. & Frieler, K. & Willner, S.N. & Sauer, I. & Otto, C., 2021. "Long-term impacts of tropical cyclones and fluvial floods on economic growth – Empirical evidence on transmission channels at different levels of development," World Development, Elsevier, vol. 144(C).
    4. Olivier Deschênes & Michael Greenstone, 2007. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather," American Economic Review, American Economic Association, vol. 97(1), pages 354-385, March.
    5. William D. Nordhaus, 2010. "The Economics Of Hurricanes And Implications Of Global Warming," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 1-20.
    6. Katrina Jessoe & Dale T. Manning & J. Edward Taylor, 2018. "Climate Change and Labour Allocation in Rural Mexico: Evidence from Annual Fluctuations in Weather," Economic Journal, Royal Economic Society, vol. 128(608), pages 230-261, February.
    7. Robert Mendelsohn & Kerry Emanuel & Shun Chonabayashi & Laura Bakkensen, 2012. "The impact of climate change on global tropical cyclone damage," Nature Climate Change, Nature, vol. 2(3), pages 205-209, March.
    8. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LLC, vol. 9(1), pages 86-136, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Toan Phan & Felipe Schwartzman, 2023. "Climate Defaults and Financial Adaptation," Working Paper 23-06, Federal Reserve Bank of Richmond.
    2. Phan, Toàn & Schwartzman, Felipe, 2024. "Climate defaults and financial adaptation," European Economic Review, Elsevier, vol. 170(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Animashaun, Jubril & Emediegwu, Lotanna E. & Okoror, Okiemua T. & Osadolor, Nneka E., 2026. "Harmful temperatures and consumption expenditure: Evidence from Nigerian households," Ecological Economics, Elsevier, vol. 241(C).
    2. Federica Alfani & Vasco Molini & Giacomo Pallante & Alessandro PalmaGran, 2024. "Job displacement and reallocation failure. Evidence from climate shocks in Morocco," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 51(1), pages 1-31.
    3. S. Seo, 2014. "Estimating Tropical Cyclone Damages Under Climate Change in the Southern Hemisphere Using Reported Damages," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(3), pages 473-490, July.
    4. Francisco Costa & Fabien Forge & Jason Garred & João Paulo Pessoa, 2020. "Climate Change and the Distribution of Agricultural Output," Working Papers 2003E, University of Ottawa, Department of Economics.
    5. Isabelle Chort & Maëlys de la Rupelle, 2022. "Managing the impact of climate on migration: evidence from Mexico," Journal of Population Economics, Springer;European Society for Population Economics, vol. 35(4), pages 1777-1819, October.
    6. Eleftherios Giovanis & Oznur Ozdamar, 2025. "The transboundary effects of climate change and global adaptation: the case of the Euphrates–Tigris water basin in Turkey and Iraq," Empirical Economics, Springer, vol. 68(4), pages 1935-1972, April.
    7. Qingen Gai & Chengzheng Li & Peng Zhang, 2025. "How does temperature affect rural income: Channels and implication of adaptation," Southern Economic Journal, John Wiley & Sons, vol. 92(2), pages 272-312, October.
    8. Jaqueline Oliveira & Bruno Palialol & Paula Pereda, 2021. "Do temperature shocks affect non-agriculture wages in Brazil? Evidence from individual-level panel data," Working Papers, Department of Economics 2021_13, University of São Paulo (FEA-USP).
    9. S. Niggol Seo, 2017. "Measuring Policy Benefits Of The Cyclone Shelter Program In The North Indian Ocean: Protection From Intense Winds Or High Storm Surges?," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 8(04), pages 1-18, November.
    10. He, Xi & Chen, Zhenshan, 2022. "Weather, cropland expansion, and deforestation in Ethiopia," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    11. Valenti, Giulia & Vona, Francesco, 2024. "Hot Wages: How Do Heat Waves Change the Earnings Distribution?," FEEM Working Papers 348848, Fondazione Eni Enrico Mattei (FEEM).
    12. Huang, Kaixing & Zhao, Hong & Huang, Jikun & Wang, Jinxia & Findlay, Christopher, 2020. "The impact of climate change on the labor allocation: Empirical evidence from China," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    13. Arellano Gonzalez, Jesus, "undated". "Estimating climate change damages in data scarce and non-competitive settings: a novel version of the Ricardian approach with an application to Mexico," 2018 Annual Meeting, August 5-7, Washington, D.C. 274010, Agricultural and Applied Economics Association.
    14. Arellano Gonzalez Jesus & Juárez-Torres Miriam & Zazueta Borboa Francisco, 2023. "Weather Shocks, Prices and Productivity: Evidence from Staples in Mexico," Working Papers 2023-16, Banco de México.
    15. Arellano-González, Jesús & Juárez-Torres, Miriam, 2026. "Temperature and quarterly economic activity: panel data evidence from Mexico," Environment and Development Economics, Cambridge University Press, vol. 31(2-3), pages 96-116, April.
    16. Jin, Hao & Chen, Dengke & Xu, Shu, 2025. "Climate change and rural income inequality: Evidence from China," Energy Economics, Elsevier, vol. 149(C).
    17. repec:ags:aaea22:335558 is not listed on IDEAS
    18. Li, Man, 2025. "Labor reallocation in the heat: A comprehensive analysis in rural Bangladesh," Journal of Environmental Economics and Management, Elsevier, vol. 134(C).
    19. Cui, Xiaomeng & Zhong, Zheng, 2024. "Climate change, cropland adjustments, and food security: Evidence from China," Journal of Development Economics, Elsevier, vol. 167(C).
    20. Kulanthaivelu, Eric, 2023. "The impact of tropical cyclones on income inequality in the U.S.: An empirical analysis," Ecological Economics, Elsevier, vol. 209(C).
    21. Le Yu & Xiaodong Du & Qinan Lu, 2025. "Stage‐Specific Effects of Extreme Temperatures on Rural Labour Reallocation in China," Journal of Agricultural Economics, Wiley Blackwell, vol. 76(3), pages 582-601, September.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdm:wpaper:2021-24. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Subgerencia de desarrollo de sistemas (email available below). General contact details of provider: https://edirc.repec.org/data/bangvmx.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.