The Economic Impact of Weather and Climate

Richard Tol

No 2021.04, Working Papers from Fondazione Eni Enrico Mattei

Abstract: I propose a new conceptual framework to disentangle the impacts of weather and climate on economic activity and growth: A stochastic frontier model with climate in the production frontier and weather shocks as a source of inefficiency. I test it on a sample of 160 countries over the period 1950-2014. Temperature and rainfall determine production possibilities in both rich and poor countries; positively in cold countries and negatively in hot ones. Weather anomalies reduce inefficiency in rich countries but increase inefficiency in poor and hot countries; and more so in countries with low weather variability. The climate effect is larger that the weather effect.

Keywords: Climate Change; Weather Shocks; Economic Growth; Stochastic Frontier Analysis (search for similar items in EconPapers)
JEL-codes: D24 O44 O47 Q54 (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-agr, nep-env and nep-gro
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: The Economic Impact of Weather and Climate (2021)
Working Paper: The economic impact of weather and climate (2021)
Working Paper: The Economic Impact of Weather and Climate (2021)
Working Paper: The economic impact of weather and climate (2021)
Working Paper: The economic impact of weather and climate (2021)
Working Paper: The economic impact of weather and climate (2021)
Working Paper: The Economic Impact of Weather and Climate (2020)
Working Paper: The Economic Impact of Weather and Climate (2020)
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