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Macroeconomic Spillovers of Weather Shocks across U.S. States

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  • Emanuele Bacchiocchi
  • Andrea Bastianin
  • Graziano Moramarco

Abstract

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

Suggested Citation

  • Emanuele Bacchiocchi & Andrea Bastianin & Graziano Moramarco, 2024. "Macroeconomic Spillovers of Weather Shocks across U.S. States," Papers 2403.10907, arXiv.org, revised Apr 2024.
    • Handle: RePEc:arx:papers:2403.10907
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