Articles
The Impact of Extreme Weather on the Real Economy
-
AuthorWon Suk Chung (Bank of Korea), Sol Bin Lee (Bank of Korea) and Eunjeong Jo (Bank of Korea)
-
Year2025
-
VolumeVol.73
-
NumberNo.1
-
This study analyzes the impact of extreme weather, such as temperature and precipitation anomalies, on the domestic real economy by introducing the Climate Risk Index (CRI) for Korea, which captures climate-related risks. Analysis of the characteristics of Korea’s CRI reveals an upward trend in both national and regional CRIs over time, along with an widening regional disparites. This trend likely reflects a heightened frequency and intensity of extreme weather events due to global warming and environmental pollution. In recent years, there has been asymmetry in the economic impacts and persistence of extreme weather, with these effects becoming more pronounced compared to the reference period. Additionally, estimating the Phillips curve using the CRI indicates that extreme weather events have had a statistically significant impact on inflation across most items since 2010.
-
File