Temperatures and Growth: A Panel Analysis of the United States

76 Pages Posted: 10 Jan 2015 Last revised: 17 Apr 2018

Ric Colacito

University of North Carolina Kenan-Flagler Business School

Bridget Hoffmann

Inter-American Development Bank

Toan Phan

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: March 30, 2018

Abstract

We document that seasonal temperatures have significant and systematic effects on the U.S. economy, both at the aggregate level and across a wide cross-section of economic sectors. This effect is particularly strong for the summer: a 1F increase in the average summer temperature is associated with a reduction in the annual growth rate of state-level output of 0.15 to 0.25 percentage points. We combine our estimates with projected increases in seasonal temperatures and find that rising temperatures could reduce U.S. economic growth by up to one-third over the next century.

Keywords: temperatures, growth, climate change, industry analysis

JEL Classification: O44, Q51, Q59, R11

Suggested Citation

Colacito, Ric and Hoffmann, Bridget and Phan, Toan, Temperatures and Growth: A Panel Analysis of the United States (March 30, 2018). Available at SSRN: https://ssrn.com/abstract=2546456 or http://dx.doi.org/10.2139/ssrn.2546456

Riccardo Colacito

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

HOME PAGE: http://www.unc.edu/~colacitr

Bridget Hoffmann

Inter-American Development Bank ( email )

1300 New York Ave., NW
Washington, DC 20577
United States

Toan Phan (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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