Weather or climate? A new perspective on temperature shocks

Prevailing research suggests that climate change disproportionately burdens emerging markets and developing economies with larger output losses compared to advanced economies, positing that colder regions are less impacted than their warmer counterparts. This study revisits the empirical relationship between temperature fluctuations and real growth, with a novel focus on differentiating between transitory versus permanent temperature shifts, aligning naturally with the definitions of weather and climate change, respectively. Our findings reveal that richer and colder economies appear less affected by weather shocks, whereas this pattern reverses for climate change disturbances, challenging the conclusions of previous studies.