Published in Economic Record: Disentangling Temperature Shocks and Their Effect on Australian Inflation

NIC AU is proud to announce that Dr. Huỳnh Tấn Đạt (NIC AU), together with Mengheng Li, has published “Not All Temperature Shocks are Alike: Disentangling Heat and High Temperature Shocks and Their Effects on Inflation in Australia” in Economic Record.

The Finding

Using a structural VAR to separate short-lived weather shocks from persistent climate shocks, then tracing their effects through smooth local projections, the authors show that heatwaves do not all hit inflation the same way — impacts vary sharply across Australian states, seasons and spending categories.

The finding carries direct implications for central bank forecasting and climate-adjusted monetary policy, as policymakers increasingly grapple with the macroeconomic consequences of a warming climate.

Read more on the Resources page or the full paper on Wiley Online Library.