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

Author

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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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    1. Pierre Mérel & Matthew Gammans, 2021. "Climate Econometrics: Can the Panel Approach Account for Long‐Run Adaptation?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1207-1238, August.
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    Citations

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    Cited by:

    1. Nguyen, Ha Minh, 2024. "Beyond the annual averages: Impact of seasonal temperature on employment growth in US counties," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    2. Tol, Richard S.J., 2024. "A meta-analysis of the total economic impact of climate change," Energy Policy, Elsevier, vol. 185(C).
    3. Matteo Ficarra & Rebecca Mari, 2025. "Weathering the storm: sectoral economic and inflationary effects of floods and the role of adaptation," Bank of England working papers 1120, Bank of England.
    4. Nabil Daher, 2024. "Is growth at risk from natural disasters? Evidence from quantile local projections," French Stata Users' Group Meetings 2024 12, Stata Users Group.
    5. Arango-Castillo Lenin & Mart'inez-Ram'irez Francisco, 2025. "The effects of temperature and rainfall anomalies on Mexican inflation," Papers 2507.14420, arXiv.org.
    6. Nabil Daher, 2025. "Is growth at risk from natural disasters ? Evidence from quantile local projections," EconomiX Working Papers 2025-9, University of Paris Nanterre, EconomiX.
    7. Nabil Daher, 2024. "Is growth at risk from natural disasters? Evidence from quantile local projections," Working Papers 2024.8, International Network for Economic Research - INFER.
    8. Cevik, Serhan & Gwon, Gyowon, 2024. "This is going to hurt: Weather anomalies, supply chain pressures and inflation," International Economics, Elsevier, vol. 180(C).
    9. Torsten Ehlers & Jon Frost & Carlos Madeira & Ilhyock Shim, 2025. "Macroeconomic impact of weather disasters: a global and sectoral analysis," BIS Working Papers 1292, Bank for International Settlements.
    10. Daniel J. Wilson, 2025. "Estimating National Weather Effects from the Ground Up," Working Paper Series 2025-18, Federal Reserve Bank of San Francisco.
    11. Kumar, Naveen, 2025. "Beyond GDP: Quantifying Heterogeneous Impact of Climate Change on Well-being and Social Progress," SocArXiv j5kyc_v1, Center for Open Science.
    12. Giuliano,Fernando Mauro & Navia Simon,Daniel & Ruberl,Heather Jane, 2024. "The Macroeconomic Impact of Climate Shocks in Uruguay," Policy Research Working Paper Series 10740, The World Bank.
    13. Shah, Syed Sadaqat Ali & Wu, Kai, 2025. "How effective are green spending multipliers? Eco-friendly vs non-eco-friendly spending in OECD economies," Energy Policy, Elsevier, vol. 204(C).
    14. Cevik Serhan & Jalles Joao, 2024. "Eye of the Storm: The Impact of Climate Shocks on Inflation and Growth," Review of Economics, De Gruyter, vol. 75(2), pages 109-138.

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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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