Weather, climate and total factor productivity

Marco Letta and Richard Tol

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: Recently it has been hypothesized that climate change will affect total factor productivity growth. Given the importance of TFP for long-run economic growth, if true this would entail a substantial upward revision of current impact estimates. Using macro TFP data from a recently developed dataset in Penn World Tables, we test this hypothesis by directly examining the nature of the relationship between annual temperature shocks and TFP growth rates in the last decades. The results show a negative relationship only in poor countries. While statistically significant, the estimate upper bound is a reduction of TFP growth is less than 0.1%, i.e., climate change will decelerate but not reverse economic growth. This finding increases concerns over the distributional issues of future impacts, and restates the case for complementarity between climate policy and poverty reduction.

Keywords: weather variability; climate change; total factor productivity; economic growth (search for similar items in EconPapers)
JEL-codes: O44 O47 Q54 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-eff, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Related works:
Journal Article: Weather, Climate and Total Factor Productivity (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:10216

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