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Temperature and Growth: A Panel Analysis of the United States

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  • RICCARDO COLACITO
  • BRIDGET HOFFMANN
  • TOAN PHAN

Abstract

We document that seasonal temperatures have significant and systematic effects on the U.S. economy, both at the aggregate level and across a wide cross section of economic sectors. This effect is particularly strong for the summer: a 1oF increase in the average summer temperature is associated with a reduction in the annual growth rate of state‐level output of 0.15 to 0.25 percentage points. We combine our estimates with projected increases in seasonal temperatures and find that rising temperatures could reduce U.S. economic growth by up to one‐third over the next century.

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  • Riccardo Colacito & Bridget Hoffmann & Toan Phan, 2019. "Temperature and Growth: A Panel Analysis of the United States," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(2-3), pages 313-368, March.
    • Handle: RePEc:wly:jmoncb:v:51:y:2019:i:2-3:p:313-368
    DOI: 10.1111/jmcb.12574
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    Cited by:

    1. Donadelli, Michael & Grüning, Patrick & Jüppner, Marcus & Kizys, Renatas, 2017. "Global temperature, R&D expenditure, and growth," SAFE Working Paper Series 188, Leibniz Institute for Financial Research SAFE.
    2. Michael Barnett & Greg Buchak & Constantine Yannelis, 2020. "Epidemic Responses Under Uncertainty," Working Papers 2020-72, Becker Friedman Institute for Research In Economics.
    3. Michael Barnett & Greg Buchak & Constantine Yannelis, 2020. "Epidemic Responses Under Uncertainty," NBER Working Papers 27289, National Bureau of Economic Research, Inc.
    4. Arbex, Marcelo & Batu, Michael, 2020. "What if people value nature? Climate change and welfare costs," Resource and Energy Economics, Elsevier, vol. 61(C).
    5. Liu, Bo & Hirsch, Barry, 2020. "Winter Weather and Work Hours: Heterogeneous Effects and Regional Adaptation," IZA Discussion Papers 13831, Institute of Labor Economics (IZA).
    6. Matthew E. Kahn & Kamiar Mohaddes & Ryan N. C. Ng & M. Hashem Pesaran & Mehdi Raissi & Jui-Chung Yang, 2019. "Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis," IMF Working Papers 2019/215, International Monetary Fund.
    7. Donadelli, M. & Jüppner, M. & Riedel, M. & Schlag, C., 2017. "Temperature shocks and welfare costs," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 331-355.
    8. Brantley Liddle, 2018. "Warming And Income Growth In The United States: A Heterogeneous, Common Factor Dynamic Panel Analysis," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 9(04), pages 1-14, November.
    9. Michael Donadelli & Marcus Jüppner & Antonio Paradiso & Christian Schlag, 2019. "Temperature Volatility Risk," Working Papers 2019:05, Department of Economics, University of Venice "Ca' Foscari".
    10. 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.
    11. Russ, Jason, 2020. "Water runoff and economic activity: The impact of water supply shocks on growth," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).
    12. Feng, Bo & Partridge, Mark & Rembert, Mark, 2016. "The Perils of Modelling How Migration Responds to Climate Change," MPRA Paper 77059, University Library of Munich, Germany.
    13. Zhao, Xiaobing, 2018. "The Economic Impact of Temperature Shocks on China and India using Subnational Data," 2018 Annual Meeting, August 5-7, Washington, D.C. 274435, Agricultural and Applied Economics Association.
    14. Michael Donadelli & Patrick Grüning & Steffen Hitzemann, 2019. "Understanding Macro and Asset Price Dynamics During the Climate Transition," Bank of Lithuania Discussion Paper Series 18, Bank of Lithuania.
    15. Panagiotis Tzouvanas & Renatas Kizys & Ioannis Chatziantoniou & Roza Sagitova, 2019. "Can Variations in Temperature Explain the Systemic Risk of European Firms?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(4), pages 1723-1759, December.
    16. Donadelli, M. & Jüppner, M. & Paradiso, A. & Ghisletti, M., 2020. "Tornado activity, house prices, and stock returns," The North American Journal of Economics and Finance, Elsevier, vol. 52(C).

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    More about this item

    JEL classification:

    • 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
    • Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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