What Do We Learn from the Weather? The New Climate-Economy Literature

70 Pages Posted: 25 Oct 2013

See all articles by Melissa Dell

Melissa Dell

Massachusetts Institute of Technology (MIT) - Department of Economics

Benjamin F. Jones

Northwestern University; National Bureau of Economic Research (NBER)

Benjamin A. Olken

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Society of Fellows

Date Written: October 2013

Abstract

A rapidly growing body of research applies panel methods to examine how temperature, precipitation, and windstorms influence economic outcomes. These studies focus on changes in weather realizations over time within a given spatial area and demonstrate impacts on agricultural output, industrial output, labor productivity, energy demand, health, conflict, and economic growth among other outcomes. By harnessing exogenous variation over time within a given spatial unit, these studies help credibly identify (i) the breadth of channels linking weather and the economy, (ii) heterogeneous treatment effects across different types of locations, and (iii) non-linear effects of weather variables. This paper reviews the new literature with two purposes. First, we summarize recent work, providing a guide to its methodologies, data sets, and findings. Second, we consider applications of the new literature, including insights for the "damage function" within models that seek to assess the potential economic effects of future climate change.

Suggested Citation

Dell, Melissa and Jones, Benjamin F. and Olken, Benjamin A., What Do We Learn from the Weather? The New Climate-Economy Literature (October 2013). NBER Working Paper No. w19578. Available at SSRN: https://ssrn.com/abstract=2345072

Melissa Dell (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States

Benjamin F. Jones

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-3177 (Phone)
847-467-1777 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Benjamin A. Olken

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States
617-253-6833 (Phone)
617-253-1330 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
617-588-1407 (Phone)

Harvard University - Society of Fellows

Cambridge, MA 02138
United States

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