Temperature and production efficiency growth: empirical evidence

Surender Kumar and Madhu Khanna ()
Additional contact information
Madhu Khanna: University of Illinois

Climatic Change, 2019, vol. 156, issue 1, No 13, 209-229

Abstract: Abstract This paper examines the marginal effects of temperature on the growth rate and variability in growth rate of total factor productivity (TFP) of a country, as measured by its production efficiency relative to a stochastic frontier. Using panel data for 168 countries for the period 1950–2014 to estimate a one-step stochastic frontier function, we find that temperature has a concave relationship with the growth rate of production efficiency and with the variability in this growth rate. We observe that hotter than the average temperature is not only detrimental to production efficiency growth but also makes the growth less stable than otherwise, and these effects are larger in very hot countries with average annual temperature greater than 25 °C. More importantly, we observe that the detrimental marginal effects of higher temperature depend on the level of economic development of a country; they are larger for poor countries relative to rich countries. Our findings have implications for the specification of climate damage functions in integrated assessment models and estimates of country-specific social cost of carbon.

Keywords: Temperature; Production efficiency growth; Stochastic frontier analysis (SFA); Non-linear effects (search for similar items in EconPapers)
JEL-codes: E23 O13 Q54 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://link.springer.com/10.1007/s10584-019-02515-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Temperature and Production Efficiency Growth: Empirical Evidence (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:climat:v:156:y:2019:i:1:d:10.1007_s10584-019-02515-5

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/10584

DOI: 10.1007/s10584-019-02515-5

Access Statistics for this article

Climatic Change is currently edited by M. Oppenheimer and G. Yohe

More articles in Climatic Change from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().