Nonlinear relationship between the weather phenomenon El nino and Colombian food prices*

Extreme weather events, like a strongEl Nino(ENSO), affect society in many different ways especially in the context of recent globe warming. In the Colombian case, ENSO had a significant impact on consumer food prices during the strongest event in 2015. Our research evaluates the relationship between ENSO and Colombian food inflation growth by using a smooth transition nonlinear model. We estimate the impacts of a strong ENSO on food inflation growth by adopting generalised impulse response functions (GIRFs). The results suggest that the weather shocks are transitory and asymmetric on inflation. A strongEl Ninoshock has a significant effect on the food inflation growth from five to nine months after the shock, and the accumulated elasticity is close to 730 basic points. We build the GIRFs for eight different episodes associated with a strongEl Ninoin the period corresponding from March 1962 to December 2018, and there is no evidence of changes in the size of Colombian food inflation growth responses over time. Finally, the negative shock, associated with a strongLa Nina, shows an ambiguous effect on food prices.