PT  - JOURNAL ARTICLE
AU  - Rojasavachai, Ravipa
AU  - Rouxelin, Florent
AU  - Yang, Li
AU  - Gao, Yumeng
TI  - Weathering the Storm
AID  - 10.3368/le.101.4.060723-0051R
DP  - 2025 May 30
TA  - Land Economics
PG  - 060723-0051R
4099  - http://le.uwpress.org/content/early/2025/05/23/le.101.4.060723-0051R.short
4100  - http://le.uwpress.org/content/early/2025/05/23/le.101.4.060723-0051R.full
AB  - This study examines the financial consequences of extreme weather using data from the Australian Actuaries Climate Index (AACI), which tracks temperature, rainfall, drought, wind, and sea level. Employing both a simple average of AACI components and Principal Component Analysis (PCA), we use a vector autoregression (VAR) model to identify financial market disruptions, including inflationary pressures from food and energy prices, declines in interest rates, and rising unemployment. Energy consumption spikes highlight asset allocation challenges, while Core CPI experiences significant volatility. These findings emphasize the role of extreme weather shocks in shaping inflation dynamics and broader financial stability.