Macroeconomic Spillovers of Weather Shocks across U.S. States

34 Pages Posted: 24 Jul 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: June 14, 2024

Abstract

We estimate the short-run effects of severe weather shocks on local economic activity and assess cross-border spillovers operating through economic linkages between U.S. states. We measure weather shocks using a detailed county-level database on emergency declarations triggered by natural disasters and estimate their impacts with a monthly Global Vector Autoregressive (GVAR) model for the U.S. States. Impulse responses highlight significant country-wide macroeconomic effects of weather shocks hitting individual regions. We also show that (i) taking into account economic interconnections between states allows capturing much stronger spillover effects than those associated with mere spatial adjacency, (ii) geographical heterogeneity is critical for assessing country-wide effects of weather shocks, and (iii) network effects amplify the local impacts of these 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 (June 14, 2024). FEEM Working Paper No. 09.2024, Available at SSRN: https://ssrn.com/abstract=4881383 or http://dx.doi.org/10.2139/ssrn.4881383

Emanuele Bacchiocchi (Contact Author)

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

University of Bologna - Department of Economics

Piazza Scaravilli 2
Bologna, 40126
Italy

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