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Climate change and economic activity: evidence from US states

Author

Listed:
  • Kamiar Mohaddes
  • Ryan N C Ng
  • M Hashem Pesaran
  • Mehdi Raissi
  • Jui-Chung Yang

Abstract

We investigate the long-term macroeconomic effects of climate change across 48 US states over the period 1963–2016 using a novel econometric strategy that 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 US estimates tend to be asymmetrical with respect to deviations of climate variables (including precipitation) from their historical norms.

Suggested Citation

  • Kamiar Mohaddes & Ryan N C Ng & M Hashem Pesaran & Mehdi Raissi & Jui-Chung Yang, 2023. "Climate change and economic activity: evidence from US states," Oxford Open Economics, Oxford University Press, vol. 2, pages 28-46.
    • Handle: RePEc:oup:ooecxx:v:2:y:2023:i::p:28-46.
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    File URL: http://hdl.handle.net/10.1093/ooec/odac010
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    1. Patrycja Klusak & Matthew Agarwala & Matt Burke & Moritz Kraemer & Kamiar Mohaddes, 2023. "Rising Temperatures, Falling Ratings: The Effect of Climate Change on Sovereign Creditworthiness," Management Science, INFORMS, vol. 69(12), pages 7468-7491, December.
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    Cited by:

    1. Emanuele Bacchiocchi & Andrea Bastianin & Graziano Moramarco, 2024. "Macroeconomic Spillovers of Weather Shocks across U.S. States," Working Papers 2024.09, Fondazione Eni Enrico Mattei.
    2. Oscar Claveria & Petar Sorić, 2023. "Labour market uncertainty after the irruption of COVID-19," Empirical Economics, Springer, vol. 64(4), pages 1897-1945, April.
    3. Sylvain Leduc & Daniel J. Wilson, 2023. "Climate Change and the Geography of the U.S. Economy," Working Paper Series 2023-17, Federal Reserve Bank of San Francisco.
    4. Bo Zhao, 2022. "The Impact of Weather on Local Government Spending," Working Papers 22-22, Federal Reserve Bank of Boston.

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    More about this item

    Keywords

    climate change; economic growth; adaptation; United States;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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