RT Journal Article
SR Electronic
T1 Weathering the Storm
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 060723-0051R
DO 10.3368/le.101.4.060723-0051R
A1 Rojasavachai, Ravipa
A1 Rouxelin, Florent
A1 Yang, Li
A1 Gao, Yumeng
YR 2025
UL http://le.uwpress.org/content/early/2025/05/23/le.101.4.060723-0051R.abstract
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.