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The Persistent Effects of Monsoon Rainfall Shocks in India: A Nonlinear VAR Approach

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  • Hertweck, Matthias
  • Brey, Bjoern

Abstract

We examine the effects of monsoon rainfall shocks on agricultural output, wages, and prices in India. The effects are highly asymmetric: agricultural output falls by 16% after a negative shock, but a positive shock has no significant effects. Although the drop in agricultural output is very short-lived, it elicits a persistent decline (increase) in wages (food prices). This indicates that famines are caused by a persistent disruption in food acquisition, rather than by a shortage in food supply.

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  • Hertweck, Matthias & Brey, Bjoern, 2017. "The Persistent Effects of Monsoon Rainfall Shocks in India: A Nonlinear VAR Approach," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168256, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc17:168256
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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • 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
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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