Macroeconomic Spillovers of Weather Shocks across U.S. States

43 Pages Posted: 11 Apr 2024 Last revised: 23 May 2024

See all articles by Emanuele Bacchiocchi

Emanuele Bacchiocchi

University of Bologna - Department of Economics

Andrea Bastianin

University of Milan; Fondazione Eni Enrico Mattei

Graziano Moramarco

University of Bologna - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 8, 2024

Abstract

We estimate the short-run effects of severe weather shocks on local economic activity and cross-border spillovers operating through economic linkages between U.S. states. We measure weather shocks using emergency declarations triggered by natural disasters and estimate their impacts with a monthly Global Vector Autoregressive (GVAR) model for U.S. states. Impulse responses highlight country-wide effects of weather shocks hitting individual regions. Taking into account economic interconnections between states allows capturing much stronger spillovers than those associated with mere spatial adjacency. Also, geographical heterogeneity is critical for assessing country-wide effects of weather shocks, and network effects amplify the local impacts of shocks.

Keywords: Global VAR, natural disasters, spillovers, weather shocks, United States, climate change

JEL Classification: C32, R11, Q51, Q54

Suggested Citation

Bacchiocchi, Emanuele and Bastianin, Andrea and Moramarco, Graziano, Macroeconomic Spillovers of Weather Shocks across U.S. States (March 8, 2024). Available at SSRN: https://ssrn.com/abstract=4752662 or http://dx.doi.org/10.2139/ssrn.4752662

Emanuele Bacchiocchi

University of Bologna - Department of Economics ( email )

Bologna
Italy

Andrea Bastianin

University of Milan ( email )

Via Conservatorio, 7
Milan, 20122
Italy

HOME PAGE: http://https://www.unimi.it/it/ugov/person/andrea-bastianin

Fondazione Eni Enrico Mattei ( email )

C.so Magenta 63
Milano, 20123
Italy

Graziano Moramarco (Contact Author)

University of Bologna - Department of Economics

Piazza Scaravilli 2
Bologna, 40126
Italy

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