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Effects of Climate Change on Economic Growth: Evidence from 20 Biggest Economies of the World

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  • Esra KADANALI

    (Faculty of Economics and Administrative Sciences, Ağrı İbrahim Çeçen University, Department of Business, Ağrı, Turkey. (Corresponding author))

  • Omer YALCINKAYA

    (Faculty of Economics and Administrative Sciences, Atatürk University Erzurum, Turkey.)

Abstract

This study empirically examines the symmetric and asymmetric effects of climate change measured by temperature and precipitation variables and six other indicators on economic growth in the top 20 economies in the world (WTE-20-in terms of nominal Gross Domestic Product), over the period from 1990 to 2016. Based on the extension of the Cobb-Douglas production function (CDPF), the study uses linear and nonlinear procedures within the scope of new-generation panel data analysis that takes into account the cross-sectional dependence. Regardless of which approaches are used to explain the climate regime, the evidence from this study indicates that climate change has negative and statistically significant effects on economic growth. Therefore, along with the development of climate change adaptation policies, the collaboration under the leadership of the WTE-20 countries to reduce greenhouse gas emissions and thereby prevent the temperature increases should be improved to minimize the negative effects of climate change on growth performances in these countries.

Suggested Citation

  • Esra KADANALI & Omer YALCINKAYA, 2020. "Effects of Climate Change on Economic Growth: Evidence from 20 Biggest Economies of the World," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 93-118, September.
    • Handle: RePEc:rjr:romjef:v::y:2020:i:3:p:93-118
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    More about this item

    Keywords

    climate change; economic growth; panel data analysis; cross-sectional dependence; Cobb-Douglas production function; the Top 20 economies in the world;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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