Temperature and Growth: A Panel Analysis of the United States
55 Pages Posted: 25 Apr 2017
Date Written: May 2016
This paper documents 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: an increase of 1oF 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. When these estimates are combined with projected increases in seasonal temperatures it is found that a reduction of U.S. economic growth by up to one third could occur over the next century.
Keywords: Climate change, Growth
JEL Classification: O44, Q51, Q59, R11
Suggested Citation: Suggested Citation