Climate Econometrics

33 Pages Posted: 25 Apr 2016 Last revised: 9 Feb 2023

See all articles by Solomon Hsiang

Solomon Hsiang

University of California, Berkeley; National Bureau of Economic Research

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Date Written: April 2016

Abstract

Identifying the effect of climate on societies is central to understanding historical economic development, designing modern policies that react to climatic events, and managing future global climate change. Here, I review, synthesize, and interpret recent advances in methods used to measure effects of climate on social and economic outcomes. Because weather variation plays a large role in recent progress, I formalize the relationship between climate and weather from an econometric perspective and discuss their use as identifying variation, highlighting tradeoffs between key assumptions in different research designs and deriving conditions when weather variation exactly identifies the effects of climate. I then describe advances in recent years, such as parameterization of climate variables from a social perspective, nonlinear models with spatial and temporal displacement, characterizing uncertainty, measurement of adaptation, cross-study comparison, and use of empirical estimates to project the impact of future climate change. I conclude by discussing remaining methodological challenges.

Suggested Citation

Hsiang, Solomon, Climate Econometrics (April 2016). NBER Working Paper No. w22181, Available at SSRN: https://ssrn.com/abstract=2769713

Solomon Hsiang (Contact Author)

University of California, Berkeley ( email )

2607 Hearst Avenue
Berkeley, CA 94720-7320
United States

HOME PAGE: http://gspp.berkeley.edu/directories/faculty/solomon-hsiang

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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