Global warming is expected to make the climate warmer, wetter, and wilder. It is predicted that such climate change will increase the severity and frequency of climate-related disasters like flash floods, surges, cyclones and severe storms. This article uses econometric methods to study the consequences of climate-induced natural disasters on economic growth, and how these disasters are linked to the onset of armed civil conflict either directly or via their impact on economic growth. The results show that climate-related natural disasters have a negative effect on growth and that the impact is considerable. The analysis of conflict onset shows that climate-related natural disasters do not increase the risk of armed conflict. This is also true when we instrument the change in GDP growth by climatic disasters. The result is robust to inclusion of country and time fixed effects, different estimation techniques, various operationalization of the disasters measure as well as for conflict incidence and war onset. These findings have two major implications: if climate change increases the frequency or make weather-related natural disasters more severe, it is an economic concern for countries susceptible to these types of hazards. However, our results suggest-based on historical data-that more frequent and severe climate-related disasters will not lead to more armed conflicts through their effects on GDP growth.

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We use time series techniques to estimate the importance of four main explanations for the decline of the US labor income share: rising firm markups, falling bargaining power of workers, higher investment-specific technology growth, and more automated production processes. Identification is achieved with restrictions derived from a stylized model of structural change. Our results point to automation as the main driver of the labor share, although rising markups have played an important role in the last 20 years. We also find evidence of capital-labor complementarity, suggesting that capital deepening may have raised the labor share. (JEL D21, D43, E25, J51, L23, O33, O41)

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Existing DSGE models are not able to reproduce the observed influence of international business cycles on small open economies. We construct a two-sector New Keynesian model to address this puzzle. The setup takes into account intermediate trade and producer heterogeneity, where goods and service industries differ in terms of i) price flexibility, ii) trade intensity, iii) technology, iv) I-O structure, and v) the volatility of productivity innovations. The combination of intermediate markets and heterogeneous producers makes international business cycles highly important for the small economy, even if it has a large service sector. Exploiting I-O matrices of Canadian and US industries, the model is able to reproduce the role of international disturbances typically found in empirical studies. Model simulations deliver crosscountry correlations in macroeconomic variables of about 0.7, with half of the variation in domestic variables attributed to foreign shocks.