CLIMATE CHANGE AND ECONOMIC GROWTH: EVIDENCE FROM LOCAL INCOME PROXIES

Devina Lakhtakia () and Ross McKitrick
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Devina Lakhtakia: Department of Economics and Finance, University of Guelph, Canada
Ross McKitrick: Department of Economics and Finance, University of Guelph, Canada

Climate Change Economics (CCE), 2025, vol. 16, issue 04, 1-41

Abstract: A challenge for empirical research on the effects of climate change on economic growth is the spatial mismatch between local temperature data and national economic data. Here we develop two new global datasets that measure local economic activity over time using air traffic data and satellite-measured nightlights as proxies, allowing a match to local climate variables without requiring ad hoc spatial averaging. Our data panel allows us to address some methodological criticism of previous empirical work. We find some evidence of an inverted-U shaped relationship between temperature and income although it is not robust to inclusion of a full set of explanatory variables. We find that climate change does not have a permanent effect on income growth.

Keywords: Climate change; economic growth; income growth; development; Schelling hypothesis (search for similar items in EconPapers)
JEL-codes: O13 Q54 Q56 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S2010007825500137

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