Climate change and economic activity: Evidence from US states

Vol: 
10/2022
Author name: 
Mohaddes K
Ng RNC
Pesaran MH
Raissi M
Yang J-C
Year: 
2022
Month: 
January
Abstract: 

We investigate the long-term macroeconomic effects of climate change across 48 U.S. states over the period 1963 2016 using a novel econometric strategy which links deviations of temperature and precipitation (weather) from their long-term moving-average historical norms (climate) to various state-specific economic performance indicators at the aggregate and sectoral levels. We show that climate change has a long-lasting adverse impact on real output in various states and economic sectors, and on labour productivity and employment in the United States. Moreover, in contrast to most cross-country results, our within U.S. estimates tend to be asymmetrical with respect to deviations of climate variables (including precipitation) from their historical norms.

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