A number of studies show that climatic shocks have significant economic impacts in several regions of the world, especially in, but not limited to, developing economies. In this paper we focus on a drought-related indicator of well-being and emergency spending in the Brazilian semi-arid zone -rainfed corn market -and estimate aggregate behavioral and forecast models for this market conditional on local climate determinants. We find encouraging evidence that our approach can help policy makers buy time to help them prepare for drought mitigating actions. The analysis is applicable to economies elsewhere in the world and climatic impacts other than those caused by droughts.

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This paper evaluates the impact of an increase in the value of the cash transfer paid to families by the Brazilian Bolsa Família program. The existence of a similar program in the state of Ceará, Bolsa Cidadão, that increases the value received by a subgroup of families, provides a unique dataset, enabling us to evaluate the effect of a higher value of transfer on the spending of comparable households. There is a significant increase in consumption, but it is smaller than the increment in the income, suggesting that the consumption of the households is not properly declared.

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