Working Paper

Extreme weather events and economic activity: The case of low water levels on the Rhine river

Authors

  • Martin Ademmer
  • Nils Jannsen
  • Saskia Meuchelböck
Publication Date

In this paper, we exploit exogenous variation in navigability of the Rhine river to analyze the impact of weather-related supply shocks on economic activity in Germany. Our analysis shows that low water levels lead to transportation disruptions that cause a significant and economically meaningful decrease of economic activity. In a month with 30 days of low water, industrial production in Germany declines by about 1 percent, ceteris paribus. Our analysis highlights the importance of extreme weather events for business cycle analysis and contributes to gauging the costs of extreme weather events in advanced economies. Furthermore, we provide a specific example for an idiosyncratic supply shock to a small sector that amplifies to an economically meaningful effect at the macroeconomic level.

Info

JEL Classification
E32, Q54

Key Words

  • Climate
  • Extreme Weather Events
  • Low Water
  • Supply Shocks
  • Business Cycle Effects

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