This study explores the impact of extreme climate events on price dynamics in OECD countries. Relying on time series data of economic and climate variables, it uses a regression model to analyze the effect of phenomena such as heatwaves and droughts on inflation. The results show that although certain sectors are sensitive to climate conditions (temperature, precipitation), their influence on overall inflation remains limited. In contrast, monetary variables, particularly money supply and interest rates, play a decisive role. The study thus highlights the predominant role of monetary policy in regulating inflation.
Raddaoui et al. (Mon,) studied this question.
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