Aggarwal, R. (2019): The Impact of Climate Shocks on Household Consumption in India. (Under Review at 'Environment and Development Economics') Older version: <http://piketty.pse.ens.fr/files/Aggarwal2019.pdf>
Abstract- This paper examines the impact of climate shocks, measured as temperature and precipitation variability, on monthly per capita consumption expenditure of Indian households over the 1988-2012 period, utilising data from NSSO's Consumer Expenditure Surveys. The regression results show an increase in consumption by 1.2 per cent on average in response to a one standard deviation rise in temperature, with heterogeneous impacts across economic sectors. While agricultural and industrial households experience consumption declines of 3.8 per cent and 6.5 per cent on average, service sector households exhibit consumption increases by 3 per cent on average, in response to a one standard deviation rise in temperature. The analysis suggests an increase in inequality of consumption across sectors due to climate shocks, with implications for climate policy and sustainable development.