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Nonlinear relationship between the weather phenomenon El Niño and Colombian food prices

Author

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  • Melo-Velandia, Luis Fernando
  • Parra-Amado, Daniel
  • Abril-Salcedo, Davinson Stev

Abstract

Extreme weather events, like a strong El Niño (ENSO), affect society in many different ways especially in the context of recent globe warming. In the Colombian case, ENSO had a significant impact on consumer food prices during the strongest event in 2015. Our research evaluates the relationship between ENSO and Colombian food inflation growth by using a smooth transition non-linear model. We estimate the impacts of a strong ENSO on food inflation growth by adopting Generalized Impulse Response Functions (GIRFs) and the results suggest that the weather shocks are transitory and asymmetric on inflation. A strong El Niño shock has a significate effect on the food inflation growth from six to nine months after the shock and the accumulated elasticity is close to 465 basic points. We build the GIRFs for eight different episodes associated with a strong El Niño in the period corresponding from March 1962 to December 2018 and there is no evidence of changes in the size of Colombian food inflation growth responses over time.

Suggested Citation

  • Melo-Velandia, Luis Fernando & Parra-Amado, Daniel & Abril-Salcedo, Davinson Stev, 2019. "Nonlinear relationship between the weather phenomenon El Niño and Colombian food prices," Working papers 23, Red Investigadores de Economía.
    • Handle: RePEc:rie:riecdt:23
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    Cited by:

    1. Ventosa-Santaulària, Daniel & Tapia, Edwin & Pérez-Peña, Anna Karina, 2024. "Inflation dynamics under different weather regimes: Evidence from Mexico," Ecological Economics, Elsevier, vol. 220(C).
    2. Luis Guillermo Becerra-Valbuena & Jorge A. Bonilla, 2021. "Climatic shocks, air quality, and health at birth in Bogotá," PSE Working Papers halshs-03429482, HAL.
    3. Nezir Köse & Emre Ünal, 2024. "The effects of the oil price and temperature on food inflation in Latin America," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(2), pages 3269-3295, February.
    4. Sami, Janesh & Makun, Keshmeer, 2024. "Food inflation and monetary policy in emerging economies," Journal of Asian Economics, Elsevier, vol. 95(C).
    5. Gilles Dufrénot & William Ginn & Marc Pourroy, 2021. "The Effect of ENSO Shocks on Commodity Prices: A Multi-Time Scale Approach," Working Papers halshs-03225070, HAL.
    6. Jefferson Muñoz & Alex Perez & Jaime Carabali, 2025. "Choques climáticos, productividad y desempeño de las firmas de la industria manufacturera en Colombia," Borradores de Economia 1298, Banco de la Republica de Colombia.
    7. 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.
    8. Julián Alonso Cárdenas-Cárdenas & Deicy J. Cristiano-Botia & Nicolás Martínez-Cortés, 2023. "Colombian inflation forecast using Long Short-Term Memory approach," Borradores de Economia 1241, Banco de la Republica de Colombia.
    9. Qi, Chaoping & Ma, Yu & Du, Meng & Ma, Xiaoxian & Xu, Yuan & Zhou, Xiangjun, 2025. "Impacts of climate change on inflation: An analysis based on long and short term effects and pass-through mechanisms," International Review of Economics & Finance, Elsevier, vol. 98(C).
    10. Arellano Gonzalez Jesus & Juárez-Torres Miriam & Zazueta Borboa Francisco, 2023. "Temperature shocks and their effect on the price of agricultural products: panel data evidence from vegetables in Mexico," Working Papers 2023-02, Banco de México.
    11. Juan Pablo Bermudez-Cespedes & Luis Fernando Melo-Velandia & Daniel Parra-Amado, 2025. "Do natural disasters and the announcement of ENSO events have an impact on market-based measures of inflation expectations?," Borradores de Economia 1315, Banco de la Republica de Colombia.
    12. Arellano-Gonzalez, Jesus & Juarez-Torres, Miriam & Zazueta-Borboa, Francisco, 2021. "Temperature shocks and local price changes of agricultural products: panel data evidence from Mexico," 2021 Annual Meeting, August 1-3, Austin, Texas 314060, Agricultural and Applied Economics Association.
    13. Romero, José Vicente & Naranjo-Saldarriaga, Sara, 2024. "Weather shocks and inflation expectations in semi-structural models," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(2).
    14. Valeria Bejarano-Salcedo & Juan Manuel Julio-Román & Edgar Caicedo-García & Julián Alonso Cárdenas-Cárdenas, 2020. "Entendiendo, Modelando y Pronosticando el Efecto de “El Niño” Sobre los Precios de los Alimentos: El Caso Colombiano," Borradores de Economia 1102, Banco de la Republica de Colombia.

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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