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Estimating the Consequences of Climate Change from Variation in Weather

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  • Derek Lemoine

Abstract

I formally relate the consequences of climate change to the time series variation in weather extensively explored by recent empirical literature. I show that reduced-form fixed effects estimators can recover the effects of climate if agents are myopic, if agents' payoff functions belong to a particular class, or if the actions agents take in each period do not depend on actions taken in previous periods. I also show how to recover structural estimates of climate change impacts from reduced-form weather regressions. Applying this new method, I find that an additional 2°C of global warming would reduce eastern U.S. agricultural profits by around 50% under the median estimates.

Suggested Citation

  • Derek Lemoine, 2018. "Estimating the Consequences of Climate Change from Variation in Weather," NBER Working Papers 25008, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:25008
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    More about this item

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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