IDEAS home Printed from https://ideas.repec.org/p/bis/biswps/1292.html
   My bibliography  Save this paper

Macroeconomic impact of weather disasters: a global and sectoral analysis

Author

Listed:
  • Torsten Ehlers
  • Jon Frost
  • Carlos Madeira
  • Ilhyock Shim

Abstract

Whether and how extreme weather shocks transmit to economic activity and, in turn, inflation is key for monetary policy. We look at the macroeconomic effects of different types of weather disaster for up to 151 countries over 2000-24. We study their macro-level and sectoral effects on GDP growth and on relevant sub-components of inflation. Using local projections, we find that the negative effects on GDP can be quite sizable and long-lived: -2%, -1% and -0.4% after the average-size droughts, landslides and wildfires, respectively, over four years. At the sectoral level, we find that agriculture-forestry-fishing and mining-construction-water-energy are negatively affected by several types of weather disaster. Most types of weather disaster have relatively small and short-lived effects on inflation, but with larger and more persistent increases in food prices than in the other components of CPI. Fiscal space and insurance can reduce the negative impact of natural disasters.

Suggested Citation

  • Torsten Ehlers & Jon Frost & Carlos Madeira & Ilhyock Shim, 2025. "Macroeconomic impact of weather disasters: a global and sectoral analysis," BIS Working Papers 1292, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1292
    as

    Download full text from publisher

    File URL: https://www.bis.org/publ/work1292.pdf
    File Function: Full PDF document
    Download Restriction: no
    File URL: https://www.bis.org/publ/work1292.htm
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • 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
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    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:bis:biswps:1292. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Martin Fessler (email available below). General contact details of provider: https://edirc.repec.org/data/bisssch.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.