Abstract
This paper aims to examine the relationship between climate shocks and agri-food and overall inflation in Tunisia for the period 1985–2000. Climate shocks represent extreme weather phenomena such as droughts, heat waves, and floods To address this question, the paper uses an extensive Nonlinear Autoregressive Distributed Lag (NARDL) model that incorporates a Pesaran cointegration test, enabling the exploration of potential asymmetric effects stemming from positive and negative climate shocks on both general and agri-food inflation in the short and the long run. The key findings of the paper indicate that positive temperature shocks exert a significant inflationary impact on all agricultural products, the food industry, and, more broadly, the entire Tunisian economy, both in the short and long term. Conversely, a sudden shortage in rainfall does not significantly affect either agricultural or food prices, nor does it influence the general price index. This result is rather unexpected since long-term rainfall trends significantly affect agricultural production, emphasizing the importance of appropriate agricultural policies such as irrigation.
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Source: Data provided by INS 2022 & ONAGRI 2022
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Data availability
The data used in this study is indicated in the text under the reference National Institute of Statistics (INS) and the Institute of Quantitative Economics (IEQ) (1985-2020). Data from Tunisia's statistical yearbooks is used for the analysis of the consumer's basket, while the National Observatory of Agriculture (ONAGRI). Additionally, the National Institute of Meteorology contributes data on average monthly temperature and rainfall from 1985 to 2020.
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Zouabi, O., Dimou, M. The impact of climate change on inflation in Tunisia: evidence from the asymmetric NARDL model. Environ Econ Policy Stud (2024). https://doi.org/10.1007/s10018-024-00398-0
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DOI: https://doi.org/10.1007/s10018-024-00398-0