Does El Nino Affect Business Cycles

Abstract

In this paper we test to see if the El Niño-Southern Oscillation (ENSO) phenomenon has an influence on national business cycles. If El Niño has any effect at all on business cycles and economic growth, one would expect it, at the very least, to affect small, undiversified economies highly dependent on agriculture and fishing. However, we find that while El Niño exhibits some influence on South Africa, Australia, and perhaps India, there is surprisingly little statistically significant effect on GDP growth or on price inflation in the other countries in our sample. Moreover, we see little significant El Niño effect on agricultural commodity prices.