Weather Shocks and Sectoral Dynamics in European Economies

Daniele Colombo and Laurent Ferrara

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: This paper investigates the dynamic effects of weather shocks on economic activity in Europe’s three largest economies: Germany, France, and Italy. We develop a novel approach to measuring country-level exposure to abnormal weather, based on grid-level data weighted by economic activity. We construct five harmonized weather indices—heat, cold, drought, precipitation, and wind—and, using a Bayesian SVAR framework, assess their impact on output and prices across major sectors: energy, construction, manufacturing, and services. The results show that weather shocks have both direct and indirect effects on economic activity, with substantial heterogeneity across shock types and production sectors.

Keywords: weather shocks; sectoral output; European production; Bayesian SVAR (search for similar items in EconPapers)
JEL-codes: C32 E23 Q54 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2024-01, Revised 2025-09
New Economics Papers: this item is included in nep-eec, nep-env and nep-eur
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Citations: View citations in EconPapers (3)

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https://crawford.anu.edu.au/sites/default/files/20 ... _Revised_Sep2025.pdf Revised Version (application/pdf)
https://crawford.anu.edu.au/sites/default/files/20 ... ed_August%202024.pdf Revised Version (application/pdf)
https://crawford.anu.edu.au/sites/default/files/20 ... l_January%202024.pdf Original Version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2024-07

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