Does Drought Explain the Kansas Collapse?

Ironman at Political Calculations asserts it does. Unfortunately, he makes a mistake in calculating Kansas GDP ex.-agriculture by simply subtracting chained agriculture from chained state GDP (discussed in the addendum to this post). Here in Figure 1 is properly calculated GDP ex.-agriculture plotted against a drought index (lower values is a more severe drought).



ks_exagr_pdsi


Figure 1: Palmer drought severity index for Kansas (blue, left scale), and Kansas GDP in millions of Ch.2009$, SAAR (black, right log scale), and ex.-agriculture (red, right log scale), calculated using Törnqvist approximation. NBER defined recession dates shaded gray. Source: BEA, NOAA, and author’s calculations.


Note that the slowdown is apparent in GDP excluding agriculture, post-Brownback. Drought is not the explanation. And as shown in this post, a hit to durables from the downturn in aircraft cannot be the answer.

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Published on August 10, 2016 20:39
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