Pete Klenow, Stanford University
Seminar
Date: Tuesday 27 August 2024
Time: 13.00 – 14.30
Location: IIES Seminar Room/A822
How Much Will Global Warming Cool Global Growth?
How Much Will Global Warming Cool Global Growth?
with Ishan B. Nath & Valerie A. Ramey
Does a permanent rise in temperature decrease the level or growth rate of GDP
in affected countries? Differing answers to this question lead prominent estimates of climate damages to diverge by an order of magnitude. This paper combines indirect evidence on economic growth with new empirical estimates of the dynamic effects of temperature on GDP to argue that warming has persistent, but not permanent, effects on growth. We start by presenting a range of evidence that technology flows tether country growth rates together, preventing temperature changes from causing growth rates to diverge permanently. We then use data from a panel of countries to show that temperature shocks have large and persistent effects on GDP, driven in part by persistence in temperature itself.
with Ishan B. Nath & Valerie A. Ramey
Does a permanent rise in temperature decrease the level or growth rate of GDP
in affected countries? Differing answers to this question lead prominent estimates of climate damages to diverge by an order of magnitude. This paper combines indirect evidence on economic growth with new empirical estimates of the dynamic effects of temperature on GDP to argue that warming has persistent, but not permanent, effects on growth. We start by presenting a range of evidence that technology flows tether country growth rates together, preventing temperature changes from causing growth rates to diverge permanently. We then use data from a panel of countries to show that temperature shocks have large and persistent effects on GDP, driven in part by persistence in temperature itself.
These estimates imply projected future impacts that are three to five times larger than level effect estimates and two to four times smaller than permanent growth effect estimates, with larger discrepancies for initially hot and cold countries.
Last updated: August 15, 2024
Source: Institute for International Economic Studies (IIES)