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Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis

2019-10-11 Business & Economics
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Release : 2019-10-11
Genre : Business & Economics
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Book Rating : 236/5 ( reviews)

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Book Synopsis Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis by : Matthew E. Kahn

Download or read book Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis written by Matthew E. Kahn. This book was released on 2019-10-11. Available in PDF, EPUB and Kindle. Book excerpt: We study the long-term impact of climate change on economic activity across countries, using a stochastic growth model where labor productivity is affected by country-specific climate variables—defined as deviations of temperature and precipitation from their historical norms. Using a panel data set of 174 countries over the years 1960 to 2014, we find that per-capita real output growth is adversely affected by persistent changes in the temperature above or below its historical norm, but we do not obtain any statistically significant effects for changes in precipitation. Our counterfactual analysis suggests that a persistent increase in average global temperature by 0.04°C per year, in the absence of mitigation policies, reduces world real GDP per capita by more than 7 percent by 2100. On the other hand, abiding by the Paris Agreement, thereby limiting the temperature increase to 0.01°C per annum, reduces the loss substantially to about 1 percent. These effects vary significantly across countries depending on the pace of temperature increases and variability of climate conditions. We also provide supplementary evidence using data on a sample of 48 U.S. states between 1963 and 2016, and show that climate change has a long-lasting adverse impact on real output in various states and economic sectors, and on labor productivity and employment.

The Effects of Weather Shocks on Economic Activity: What are the Channels of Impact?

2018-06-13 Business & Economics
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Release : 2018-06-13
Genre : Business & Economics
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Book Rating : 027/5 ( reviews)

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Book Synopsis The Effects of Weather Shocks on Economic Activity: What are the Channels of Impact? by : Mr.Sebastian Acevedo Mejia

Download or read book The Effects of Weather Shocks on Economic Activity: What are the Channels of Impact? written by Mr.Sebastian Acevedo Mejia. This book was released on 2018-06-13. Available in PDF, EPUB and Kindle. Book excerpt: Global temperatures have increased at an unprecedented pace in the past 40 years. This paper finds that increases in temperature have uneven macroeconomic effects, with adverse consequences concentrated in countries with hot climates, such as most low-income countries. In these countries, a rise in temperature lowers per capita output, in both the short and medium term, through a wide array of channels: reduced agricultural output, suppressed productivity of workers exposed to heat, slower investment, and poorer health. In an unmitigated climate change scenario, and under very conservative assumptions, model simulations suggest the projected rise in temperature would imply a loss of around 9 percent of output for a representative low-income country by 2100.

Impact of Climate Change on Long-run Economic Growth: Cross-country Growth Regression

2012
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Release : 2012
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Book Synopsis Impact of Climate Change on Long-run Economic Growth: Cross-country Growth Regression by : A. Girma

Download or read book Impact of Climate Change on Long-run Economic Growth: Cross-country Growth Regression written by A. Girma. This book was released on 2012. Available in PDF, EPUB and Kindle. Book excerpt: Using historical data for annual temperature and precipitation for 166 sample countries, we assessed the impact of climate change on long-run economic growth over a period 2003 to 2012. Our study addresses a general research question that “What is the impact of climate change on long-run economic growth?” In the first part of our analysis we conducted cross-sectional regressions of income per-capita against long-run average temperature and precipitation with appropriate explanatory variables in a Solow growth model. Despite the negative relationship between average temperature/precipitation and long-run level of income, in sum, our results confirm that there is no statistical significant effect of climate variability on the long-run level of income. Using Barro-type regression framework, our result on the cross-sectional relationship between mean temperature and growth rate shows that the growth rate of national income per capita falls 0.77% per degree Celsius rise in temperature. Our result also suggests that growth rate of national income per capita falls as a result of climate volatility. The regression result for effects of climate volatility shows that any deviation of temperature from its long-run average is associated with a reduction in GDP per capita growth of about 1.421 percentage points. A deviation of precipitation from its long-run average is associated with a statistically significant reduction in GDP per capita growth of about 1.051 percentage points. Therefore, our finding yields a conclusion that besides the finding that warmer temperature reduces economic growth, the more volatile climate hugely affects the economic growth of a country. Our result also revealed that the hotter countries tend to be poorer than the warmer counterparts. The impact of one degree Celsius average temperature increase in year on the long-run economic growth of poor countries is a 1.5% decrease in economic growth. It is also found that poor countries grow faster than rich ones so that there is economic convergence across countries.

Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature

2019-09-04 Business & Economics
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Release : 2019-09-04
Genre : Business & Economics
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Book Rating : 955/5 ( reviews)

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Book Synopsis Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature by : Signe Krogstrup

Download or read book Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature written by Signe Krogstrup. This book was released on 2019-09-04. Available in PDF, EPUB and Kindle. Book excerpt: Climate change is one of the greatest challenges of this century. Mitigation requires a large-scale transition to a low-carbon economy. This paper provides an overview of the rapidly growing literature on the role of macroeconomic and financial policy tools in enabling this transition. The literature provides a menu of policy tools for mitigation. A key conclusion is that fiscal tools are first in line and central, but can and may need to be complemented by financial and monetary policy instruments. Some tools and policies raise unanswered questions about policy tool assignment and mandates, which we describe. The literature is scarce, however, on the most effective policy mix and the role of mitigation tools and goals in the overall policy framework.

Macroeconomic Effects of Climate Change in an Aging World

2022-12-16 Business & Economics
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Release : 2022-12-16
Genre : Business & Economics
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Book Synopsis Macroeconomic Effects of Climate Change in an Aging World by : Mr. Vimal V Thakoor

Download or read book Macroeconomic Effects of Climate Change in an Aging World written by Mr. Vimal V Thakoor. This book was released on 2022-12-16. Available in PDF, EPUB and Kindle. Book excerpt: Climate and demographic changes are two major long-term trends that are evolving simultaneously. The global population is aging, while climate change is increasing the frequency and severity of weather-related disasters and lowering productivity. This paper examines the macroeconomic effects of these three changes in a common framework. Simulation results suggest that while aging drags down the real interest rate, climate change puts upward pressure on the real interest rate and inflation. As climate change intensifies, it will be the dominant factor shaping the macroeconomic variables. This results in higher inflation and a higher debt-to-GDP ratio, requiring tighter fiscal and monetary policies. The results further suggest that economic uncertainty induced by climate change amplifies these effects of climate change.

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