Template-Type: ReDIF-Article 1.0

Title: The Macroeconomics of Abrupt Sunlight Reduction: Global Output, Inflation, Trade, and Welfare
Author-Name: Jason Allen

Abstract: Abrupt Sunlight Reduction Scenarios (ASRS)—arising from events such as large volcanic eruptions, nuclear conflict, or major asteroid impacts—could generate severe and persistent disruptions to agricultural production, energy systems, international trade, labour markets, and aggregate economic activity. This article develops a framework for assessing the potential macroeconomic effects of an ASRS by tracing the transmission of a sudden reduction in solar radiation through climate-sensitive production, food and commodity markets, supply chains, household consumption, investment, fiscal balances, and international adjustment. The analysis emphasises the interaction between large negative supply shocks and demand-side responses, including precautionary behaviour, income losses, financial stress, and policy intervention. Particular attention is given to food-price inflation, output contraction, trade restrictions, sectoral reallocation, and heterogeneous effects across countries according to income levels, import dependence, agricultural exposure, fiscal capacity, and the resilience of critical infrastructure. The framework also highlights the possibility of nonlinear and mutually reinforcing effects, whereby shortages, protectionist measures, financial instability, and deteriorating expectations amplify the initial physical shock. Alternative ASRS severities and durations can therefore produce substantially different macroeconomic trajectories, ranging from temporary stagflation to prolonged global depression and major welfare losses. The article provides a basis for scenario-based quantitative modelling and for evaluating policies aimed at strengthening food security, supply-chain resilience, international coordination, and macroeconomic stabilisation under extreme sunlight-reduction risks.

Classification-JEL: E32, E31, F41, Q17, Q54, Q18, O44, H12.
Keywords: abrupt sunlight reduction, global catastrophic risk, macroeconomic shocks, climate–economy interactions, food security, supply shocks, inflation, international trade, economic resilience, disaster economics.

Journal: Journal of Economics and Econometrics

Pages: 81-108
Volume: 69
Issue: 1
Year: 2026

File-URL: https://ideas.repec.org/a/eei/journl/v69y2026i1p81-108.html
File-Restriction: Full text for ScienceDirect subscribers only

Handle: RePEc:eei:journl:v:69:y:2026:i:1:p:81-108