Expect Above Average Temperatures: Identifying the Economic Impacts of Climate Change
No 23549, NBER Working Papers from National Bureau of Economic Research, Inc
A rapidly growing empirical literature seeks to estimate the costs of future climate change from time series variation in weather. I formally analyze the consequences of a change in climate for economic outcomes. I show that those consequences are driven by changes in the distribution of realized weather and by expectations channels that capture how anticipated changes in the distribution of weather affect current and past investments. Studies that rely on time series variation in weather omit the expectations channels. Quantifying the expectations channels requires estimating how forecasts affect outcome variables and simulating how climate change would alter forecasts.
JEL-codes: D84 H43 Q12 Q51 Q54 (search for similar items in EconPapers)
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