The Dynamic Effects of Weather Shocks on Agricultural Production, with Ewen Gallic and Gauthier Vermandel (Last Version)

R&R Journal of Environmental Economics and Management

Abstract: This study investigates the dynamic effects of weather shocks on monthly agricultural production in Peru, using a Local Projection framework. An adverse weather shock, measured by an excess of heat or rain, always generates a negative downturn in agricultural production, but its magnitude and duration depend on several factors, such as the type of crop concerned or the timing at which it occurs. On average, a weather shock – a temperature shock– can cause a monthly decline of 5% in agricultural production for up to four consecutive months. The response is time-dependent: shocks occurring during the growing season exhibit a much larger response. At the macroeconomic level, weather shocks are and entail a decline in inflation, agricultural production, exports, exchange rate and GDP.

Weather Shocks, Agricultural prices and Inflationary pressures (Last Version)

Job Market Paper

Abstract: This paper studies the impact of weather variations on agricultural production, and how they may affect agricultural prices and price stability in a developing country. Using quarterly data on agricultural production in Peru and weather data in a novel dataset, we estimate the potential impact of adverse weather events to evaluate their effects on agricultural outcomes quarterly. We further estimate the potential impact of these risks on inflation. A dynamic and stochastic general equilibrium model, emphasizing the effects of weather events on agricultural producers, complements this analysis to investigate the channels of transmission. Results show non-linear responses of the agricultural prices to weather shocks, depending on the crop and the timing of the shock. Overall, these shocks induce inflationary pressures on both food and general price indices, although for the latter the effect appears smaller. The theoretical model contributes to understand the transmission channels and shows that reduction in CPI inflation is due to variation in demand for non-agricultural goods and changes in relative prices.

Weather Shocks and Optimal Monetary Policy in a Climate-Vulnerable Economy, with Barbara Annicchiarico

Abstract: This paper examines optimal monetary policy in response to weather shocks in a two-sector New Keynesian model calibrated for Peru, a climate-prone economy where a rural agricultural sector coexists with a modern manufacturing sector.  While adverse weather shocks disproportionately impact the agricultural sector, monetary policy primarily influences the modern sector. Following an adverse weather event that triggers a recession and inflationary pressures, targeting the production price index (PPI) inflation in the manufacturing sector rather than the consumption price index (CPI) inflation appears to be optimal for the Central Bank, as it reproduces the dynamics of the Ramsey planner.

 Can better regulation reduce structural unemployment?, with Gauthier Vermandel and Corentin Roussel (in French) 

France Stratégie (2019) 

Abstract: This work seeks to quantify the reduction in structural unemployment in France that could potentially be achieved through the implementation of reforms aimed at reducing the regulatory burden on firms without undermining the objectives pursued by regulation. The objectives of existing regulations include ensuring the quality of goods and services, guaranteeing consumer safety, and preserving the environment. Poorly calibrated regulations can create rent-seeking situations for companies, resulting in higher prices and lower quality. It is therefore crucial to improve regulation without preventing competition, in order to help lower prices, increase purchasing power, and increase production and thus employment. A comparison is made with France's main partners (notably Germany and the United Kingdom) in order to identify the main avenues of reform proposed by the major international institutions to improve the quality of regulation. An original macroeconomic model is then used to quantify the potential gains of such reforms on the French economy, particularly in terms of structural unemployment.

 How can we explain the recruitment difficulties anticipated by companies?, with Thomas Bezy, Catherine Bruneau, Etienne Lavenant and Dimitris Mavridis (in French) 

France Stratégie (2022) 

Abstract: This study investigates the factors that contribute to difficulties that firms face when trying to recruit new employees. We match firm surveys to firm’s tax records and administrative data to see how factors such as industry, location, company size, and employment characteristics affect recruitment difficulties. Our results show that about 10% of the variance in recruitment difficulties can be explained by these observable factors, and up to 14% when considering difficulties from the previous year. However, most of the difficulties encountered by companies are due to factors not captured by our data, which may be related to internal characteristics of the company such as management quality and the recruitment process.