The macroeconomic cost of climate volatility

Piergiorgio Alessandri and Haroon Mumtaz
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Haroon Mumtaz: Queen Mary University, City University of London

No 2202, BCAM Working Papers from Birkbeck Centre for Applied Macroeconomics

Abstract: We study the impact of climate volatility on economic growth exploiting data on 133 countries between 1960 and 2019. We show that the conditional (exante) volatility of annual temperatures increased steadily over time, rendering climate conditions less predictable across countries, with important implications for growth. Controlling for concomitant changes in temperatures, a +1oC increase in temperature volatility causes on average a 0.3 per cent decline in GDP growth and a 0.7 per cent increase in the volatility of GDP. Unlike changes in average temperatures, changes in temperature volatility affect both rich and poor countries.

Date: 2022-02
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Related works:
Working Paper: The macroeconomic cost of climate volatility (2022)
Working Paper: The Macroeconomic Cost of Climate Volatility (2021)
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