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Faculty of Economics

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Mohaddes, K., Ng, R. N. C., Pesaran, M. H., Raissi, M. and Yang, J-C.

Climate Change and Economic Activity: Evidence from U.S. States

CWPE2205

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.

Keywords: adaptation, Climate Change, economic growth, United States

JEL Codes: C33 O40 O44 O51 Q51 Q54

Author links: Kamiar Mohaddes  M. Hashem Pesaran  

PDF: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe2205.pdf

Open Access Link: https://doi.org/10.17863/CAM.81922

Keynes Fund Project(s):
Climate Change, Volatility, and Economic Growth: Evidence from U.S. States (JHOU)