## The Macroeconomic Impact of Droughts in Uruguay: A General Equilibrium Analysis Using the Soil Moisture Deficit Index

_IMF Working Papers, January 10, 2025_

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## Bibliographic details
- Authors: Jean François Clevy, Christopher Evans
- Published: January 10, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400298059.001

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### Summary findings
- Uruguay experienced a once-in-a-century severe drought that affected key agricultural areas and caused significant direct losses to the agricultural sector, especially for soybean production and cattle farming.
- From October 2022 to April 2023, rainfall was about 47 percent below historical averages, contributing to a decline in agricultural output and impacting overall GDP growth.
- The frequency of recent climate shocks in Uruguay, combined with its rich climate data, make Uruguay an ideal candidate to study whether weather shocks matter and through which transmission mechanisms.
- Using the empirical and theoretical framework outlined in Gallic and Vermandel (2020), the authors document that weather shocks play an important role in business cycle dynamics in Uruguay.

### Methodology and scope
- Analytical approach: General equilibrium analysis using the Soil Moisture Deficit Index and the empirical and theoretical framework from Gallic and Vermandel (2020).
- Subject coverage: Agricultural commodities; Agricultural production; Agricultural sector; Commodities; Economic sectors; Environment; Natural disasters; Production.
- Keywords emphasized in the study: Agricultural commodities, Agricultural production, Agricultural sector, Business cycles, General equilibrium analysis, Global, impact of drought, Natural disasters, soil moisture deficit index, standard deviation, Uruguay, weather shock, Weather shocks.

### Key statistics and publication metadata
- Date: January 10, 2025
- Authors: Jean François Clevy; Christopher Evans
- Pages: 47
- Volume: 2025
- Issue: 004
- Series: Working Paper No. 2025/004
- DOI: https://doi.org/10.5089/9798400298059.001
- Stock No: WPIEA2025004
- ISBN: 9798400298059
- ISSN: 1018-5941

### Implications and focus for policymakers and researchers
- Weather shocks, as measured through soil moisture deficits, are an important driver of Uruguay’s business cycle dynamics and have direct effects on agricultural output and GDP growth.
- The study underscores the importance of integrating climate shock analysis into macroeconomic modeling for countries with significant agricultural sectors and frequent climate variability.
- The Uruguay case offers a detailed empirical setting to explore transmission mechanisms from weather shocks to macroeconomic outcomes, informing policy design for resilience in agriculture and the broader economy.

*IMF Working Paper — The Macroeconomic Impact of Droughts in Uruguay: A General Equilibrium Analysis Using the Soil Moisture Deficit Index (Working Paper No. 2025/004)*

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_Source: https://www.imf.org/en/publications/wp/issues/2025/01/10/the-macroeconomic-impact-of-droughts-in-uruguay-a-general-equilibrium-analysis-using-the-560565_