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Weather Shocks, Prices and Productivity: Evidence from Staples in Mexico

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  • Arellano Gonzalez Jesus
  • Juárez-Torres Miriam
  • Zazueta Borboa Francisco

Abstract

In this paper, we investigate the effect of weather shocks on the price of two crops of great importance in Mexican agriculture: white corn and dry beans. We rely on panel data techniques applied to a 20-year long panel of prices at the market/city level. Our results show that positive temperature and negative precipitation shocks of at least 0.5 standard deviations relative to the climate normal have immediate and lagged positive effects on the price of these crops. The immediate effect is about 2.0%, while the lagged effect is between 1.0% and 2.5%, depending on the timing of the shock within the crop's growing period. We also show that one of the mechanisms explaining the effect of weather shocks on the price of these crops is their detrimental effect on productivity, especially for rainfed production.

Suggested Citation

  • 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.
    • Handle: RePEc:bdm:wpaper:2023-16
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    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7BF0F71E84-70B8-2F43-9825-249C2326065F%7D.pdf
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    More about this item

    Keywords

    Food Inflation; Weather Shocks; Staple prices; Local Markets;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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