Predictability of economic slowdowns in advanced countries over eight centuries: The role of climate risks

Rangan Gupta, Jacobus Nel, Afees Salisu and Qiang Ji

Finance Research Letters, 2023, vol. 54, issue C

Abstract: We analyze the predictive content of climate risks, proxied by change in global temperature anomaly and its volatility, on a dummy variable capturing periods of zero and negative growth rates of eight industrialized countries. In this regard, we apply a Probit model to longest possible historical datasets available for these countries covering 1311 till 2020, and control for inflation and interest rates. We find strong evidence that changes in global temperature anomaly and/or its stochastic volatility in particular, tend to predict slowdown or stagnation in all the eight economies at the different predictive horizons considered.

Keywords: Growth; Climate risks; Probit model; Predictions (search for similar items in EconPapers)
JEL-codes: C25 C53 O40 Q54 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (9)

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Working Paper: Predictability of Economic Slowdowns in Advanced Countries over Eight Centuries: The Role of Climate Risks (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:54:y:2023:i:c:s154461232300168x

DOI: 10.1016/j.frl.2023.103795

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