Letta & Tol_R&R No. 2.pdf (1.38 MB)
Weather, climate and total factor productivity
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.
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Publication status
- Published
File Version
- Accepted version
Journal
Environmental and Resource EconomicsISSN
0924-6460Publisher
Springer VerlagExternal DOI
Issue
1Volume
73Page range
283-305Department affiliated with
- Economics Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2018-06-13First Open Access (FOA) Date
2019-06-22First Compliant Deposit (FCD) Date
2018-06-13Usage metrics
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