Temperature and Growth: A Panel Analysis of the United States

Colacito, Riccardo; Hoffman, Bridget; Phan, Toàn

doi:10.21144/wp18-09

Cited by 29 publications

(59 citation statements)

References 13 publications

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“…When including other macroeconomic variables, the effect on TFP growth becomes (statistically) weaker. However, we are still able to observe an overall negative impact on the economy as indicated by a decrease in future consumption growth (¡0.3pp), output growth (¡0.5pp), investment growth (¡1pp) and labor productivity growth (¡0.5pp), consistent with recent empirical evidence (see Colacito et al, 2016). By accounting for the dynamics of asset prices in the VAR estimation, the negative effect of temperature on future TFP growth remains qualitatively unaffected.…”

Section: Introductionsupporting

confidence: 86%

“…We specify two distinct long-run components for macro and temperature shocks in order to disentangle the timing of those innovations. In contrast to long-run macro shocks, unexpected temperature increases have a contemporaneous impact on TFP growth as suggested by our empirical analysis and existing evidence (see Colacito et al, 2016).…”

supporting

confidence: 75%

“…In the case of the price-dividend 6 We obtain similar estimates if we include a dummy variable for the Great Recession period in the full sample. Despite the relatively large future effect (i.e., two years after the temperature shock), it is noteworthy to mention that the temperature effect on contemporaneous GDP growth is of similar size as in Colacito et al (2016) for both, the full and the shorter sample period. ratio, two competing effects arise.…”

Section: Temperature Shocks Productivity and Asset Pricesmentioning

confidence: 83%

“…Recent studies show that increases in temperature harm real economic activity (Bansal and Ochoa, 2011;Dell et al, 2012;Cai et al, 2015;Colacito et al, 2016;Dua et al, 2017). We contribute to this evidence by investigating the impact of rising temperatures on macroeconomic variables and asset prices.…”

Section: Temperature Shocks and The Us Macroeconomymentioning

confidence: 87%

“…Our decision to focus on the U.S. is motivated by two main reasons. First, U.S. data provide us with longer time series and, thus, more data points for the VAR estimations, and second this approach allows us to compare our empirical evidence with the recent findings of Colacito et al (2016), who work with more granular, quarterly, U.S. data. We start our analysis by estimating a bivariate VAR model for TFP growth and tem-perature dynamics.…”

Section: Temperature Shocks and The Us Macroeconomymentioning

confidence: 98%

See 4 more Smart Citations

Temperature shocks and welfare costs

Donadelli

Jüppner

Riedel

et al. 2017

Journal of Economic Dynamics and Control

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This paper examines the welfare implications of rising temperatures. Using a standard VAR, we empirically show that a temperature shock has a sizable, negative and statistically significant impact on TFP, output, and labor productivity. We rationalize these findings within a production economy featuring long-run temperature risk. In the model, macro-aggregates drop in response to a temperature shock, consistent with the novel evidence in the data. Such adverse effects are long-lasting. Over a 50-year horizon, a one-standard deviation temperature shock lowers both cumulative output and labor productivity growth by 1.4 percentage points. Based on the model, we also show that temperature risk is associated with non-negligible welfare costs which amount to 18.4% of the agent's lifetime utility and grow exponentially with the size of the impact of temperature on TFP. Finally, we show that faster adaptation to temperature shocks results in lower welfare costs. These welfare benefits become substantially higher in the presence of permanent improvements in the speed of adaptation.JEL classification: E30, G12, Q0

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Section: Introductionsupporting

confidence: 86%

supporting

confidence: 75%

Section: Temperature Shocks Productivity and Asset Pricesmentioning

confidence: 83%

Section: Temperature Shocks and The Us Macroeconomymentioning

confidence: 87%

Section: Temperature Shocks and The Us Macroeconomymentioning

confidence: 98%

See 3 more Smart Citations

Temperature shocks and welfare costs

Donadelli

Jüppner

Riedel

et al. 2017

Journal of Economic Dynamics and Control

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The Perils of Modelling How Migration Responds to Climate Change

Feng

Partridge

Rembert

2018

Advances in Spatial Science

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The impact of climate change has drawn growing interests from both researchers and policymakers. Yet, relatively little is known with respect to its influence on interregional migration. The surge of extreme weather conditions could lead to the increase of forced migration from coastal to inland regions, which normally follows different patterns than voluntary migration. However, recent migration models tend to predict unrealistic migration trends under climate change in that migration would flow towards the areas most adversely affected. Given the great uncertainty about the magnitude and distribution of severe weather events, it is almost impossible to foresee migration directions by simply extrapolating from the data on how people have responded in the past to climate and weather. For example, weather events will likely be far outside of what has been observed. Other issues include a poor climate measures and a poor understanding of how climate affects migration in an entirely different structural environment. Unintended consequence of public policies also contributes to the complication of predicting future migration pattern. In this paper, we survey the limitations of existing climate change literature, explore insights of regional economic studies, and provide potential solutions to those issues.

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Temperature Variability and the Macroeconomy: A World Tour

Donadelli

Jüppner

Vergalli

2021

Environ Resource Econ

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This paper uses historical monthly temperature level data for a panel of 114 countries to identify the effects of within year temperature level variability on productivity growth in five different macro regions, i.e., (1) Africa, (2) Asia, (3) Europe, (4) North America and (5) South America. We find two primary results. First, higher intra-annual temperature variability reduces (increases) productivity in Europe and North America (Asia). Second, higher intra-annual temperature variability has no significant effects on productivity in Africa and South America. Additional empirical tests indicate also the following: (1) rising intra-annual temperature variability reduces productivity (even thought less significantly)in both tropical and non-tropical regions, (2) inter-annual temperature variability reduces (increases) productivity in North America (Europe) and (3) winter and summer inter-annual temperature variability generates a drop in productivity in both Europe and North America. Taken together, these findings indicate that temperature variability shocks tend to have stronger adverse economic effects among richer economies. In a production economy featuring long-run productivity and temperature volatility shocks, we quantify these negative impacts and find welfare losses of 2.9% (1%) in Europe (North America).

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Temperature and Growth: A Panel Analysis of the United States

Cited by 29 publications

References 13 publications

Temperature shocks and welfare costs

Temperature shocks and welfare costs

The Perils of Modelling How Migration Responds to Climate Change

Temperature Variability and the Macroeconomy: A World Tour

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