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Weather, climate and total factor productivity

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journal contribution
posted on 2023-06-09, 13:42 authored by Marco Letta, Richard TolRichard Tol
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.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Environmental and Resource Economics

ISSN

0924-6460

Publisher

Springer Verlag

Issue

1

Volume

73

Page range

283-305

Department affiliated with

  • Economics Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2018-06-13

First Open Access (FOA) Date

2019-06-22

First Compliant Deposit (FCD) Date

2018-06-13

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