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Estimating Macrofiscal Effects of Climate Shocks from Billions of Geospatial Weather Observations

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  • Berkay Akyapı
  • Matthieu Bellon
  • Emanuele Massetti

Abstract

The literature studying the macroeconomics of weather has focused on temperature and precipitation annual averages, while microstudies have focused more on extreme weather measures. We construct hundreds of variables from high-frequency, high-spatial-resolution weather measurements. Using the LASSO, we identify the parsimonious subset of variables that can best explain GDP and key macrofiscal variables. We find that scarcer mild temperatures and an increase in the occurrence of high temperatures and severe droughts reduce GDP. These variables substantially improve the share of GDP variations explained by weather. Additional evidence suggests that fiscal policy mitigates these shocks.

Suggested Citation

  • Berkay Akyapı & Matthieu Bellon & Emanuele Massetti, 2025. "Estimating Macrofiscal Effects of Climate Shocks from Billions of Geospatial Weather Observations," American Economic Journal: Macroeconomics, American Economic Association, vol. 17(3), pages 114-159, July.
    • Handle: RePEc:aea:aejmac:v:17:y:2025:i:3:p:114-59
    DOI: 10.1257/mac.20230042
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    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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