Global Agricultural Output Under Climate Shocks: Evidence From 160 Economies

ABSTRACT This study investigates the impact of climate shocks and fertilizer consumption on agricultural outputs across 160 economies from 1996 to 2021. Using a unified empirical framework and ordinary least squares‐fixed effects (OLS‐FE) regressions, we analyze how deviations in rainfall and temperature, alongside fertilizer use, influence agricultural productivity. We find that fertilizer consumption has a significant positive impact on agricultural productivity. Still, climate shocks, measured by deviations from historical averages of rainfall and temperature, negatively affect agricultural output, offsetting the benefits of fertilizer use. To address potential endogeneity in fertilizer use, we employ two‐stage least squares (2SLS) estimations, using merchandise trade as a share of GDP and a one‐period lag of fertilizer consumption as instruments. Our results are robust and further reveal that the interaction between climate shocks and fertilizer consumption varies by region and income level. These findings highlight the importance of developing strong supply chain as integrated policies to enhance agricultural resilience, promote sustainable input practices, and mitigate the adverse impacts of climate change on food security.