Download This PaperEconomic Impact of Climate Change
67 Pages Posted: 1 Sep 2022
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Does Climate Change Affect Firm Output? Identifying Supply Effects
Date Written: August 30, 2022
Abstract
We estimate the economic impact of climate change by exploiting variation in local temperature across suppliers of the same client. We find that suppliers experiencing a 1°C increase in average daily temperature decrease their sales by 2%. The effect is more pronounced among suppliers in manufacturing and heat-sensitive industries, which is consistent with lower labor productivity and supply when temperatures are higher. Financially constrained suppliers are more affected due to their lack of financial flexibility to adapt to changes in temperatures. We also find that episodes of extremely hot and cold weather lead to large drops in sales.
Keywords: Climate change, Climate finance, Economic costs, Firm sales, Production networks, Productivity, Financial constraints
JEL Classification: G31, G32, L11, L14, Q54
Suggested Citation: Suggested Citation
European Corporate Governance Institute (ECGI) ( email )
c/o the Royal Academies of Belgium
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1000 Brussels
Belgium
Miguel Almeida Ferreira (Contact Author)
Nova School of Business and Economics ( email )
Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal
European Corporate Governance Institute (ECGI) ( email )
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium
University of St. Gallen - School of Finance ( email )
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St.Gallen, CH-9000
Switzerland
Swiss Finance Institute ( email )
c/o University of Geneva
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