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 the Penn World Table, we test this hypothesis by directly examining the nature of the relationship between annual temperature shocks and TFP growth rates in the period 1960–2006. The results show a negative relationship only exists in poor countries, where a 1 °C annual increase in temperature decreases TFP growth rates by about 1.1–1.8 percentage points, whereas the impact is indistinguishable from zero in rich countries. Extrapolating from weather to climate, the possibility of dynamic effects of climate change in poor countries increases concerns over the distributional issues of future impacts and, from a policy perspective, restates the case for complementarity between climate policy and poverty reduction.

Weather, Climate and Total Factor Productivity / Letta, M.; Tol, R. S. J.. - In: ENVIRONMENTAL & RESOURCE ECONOMICS. - ISSN 0924-6460. - 73:1(2019), pp. 283-305. [10.1007/s10640-018-0262-8]

Weather, Climate and Total Factor Productivity

Letta M.
Primo
;
2019

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 the Penn World Table, we test this hypothesis by directly examining the nature of the relationship between annual temperature shocks and TFP growth rates in the period 1960–2006. The results show a negative relationship only exists in poor countries, where a 1 °C annual increase in temperature decreases TFP growth rates by about 1.1–1.8 percentage points, whereas the impact is indistinguishable from zero in rich countries. Extrapolating from weather to climate, the possibility of dynamic effects of climate change in poor countries increases concerns over the distributional issues of future impacts and, from a policy perspective, restates the case for complementarity between climate policy and poverty reduction.
2019
Climate change; Economic growth; Total factor productivity; Weather variability
01 Pubblicazione su rivista::01a Articolo in rivista
Weather, Climate and Total Factor Productivity / Letta, M.; Tol, R. S. J.. - In: ENVIRONMENTAL & RESOURCE ECONOMICS. - ISSN 0924-6460. - 73:1(2019), pp. 283-305. [10.1007/s10640-018-0262-8]
File allegati a questo prodotto
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/1416431
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 77
  • ???jsp.display-item.citation.isi??? 77
social impact