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Climate change and economic activity: Evidence from US states

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  • 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 U.S. states over the period 1963 2016 using a novel econometric strategy which 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 U.S. 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, 2022. "Climate change and economic activity: Evidence from US states," CAMA Working Papers 2022-10, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2022-10
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2022-01/10_2022_mohaddes_ng_pesaran_raissi_yang0.pdf
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    Cited by:

    1. Oscar Claveria & Petar Sorić, 2023. "Labour market uncertainty after the irruption of COVID-19," Empirical Economics, Springer, vol. 64(4), pages 1897-1945, April.
    2. 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.
    3. 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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