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Macroeconomic Spillovers of Weather Shocks across U.S. States

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  • Bacchiocchi, Emanuele
  • Bastianin, Andrea
  • Moramarco, Graziano

Abstract

We estimate the short-run effects of severe weather shocks on local economic activity and assess cross-border spillovers operating through economic linkages between U.S. States. We measure weather shocks using a detailed county-level database on emergency declarations triggered by natural disasters and estimate their impacts with a monthly Global Vector Autoregressive (GVAR) model for the U.S. States. Impulse responses highlight significant country-wide macroeconomic effects of weather shocks hitting individual regions. We also show that (i) taking into account economic interconnections between states allows capturing much stronger spillover effects than those associated with mere spatial adjacency, (ii) geographical heterogeneity is critical for assessing country-wide effects of weather shocks, and (iii) network effects amplify the local impacts of these shocks.

Suggested Citation

  • Bacchiocchi, Emanuele & Bastianin, Andrea & Moramarco, Graziano, 2024. "Macroeconomic Spillovers of Weather Shocks across U.S. States," FEEM Working Papers 343506, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemwp:343506
    DOI: 10.22004/ag.econ.343506
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    More about this item

    Keywords

    Climate Change; Resource /Energy Economics and Policy; Sustainability;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • 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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