Weather Shocks and Output in Low-Income Countries: The Role of Policies and Adaptation
IMF Working Papers, August 16, 2019
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- Weather Shocks and Output in Low-Income Countries: The Role of Policies and Adaptation
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Bibliographic details
- Authors: Sebastian Acevedo Mejia, Claudio Baccianti, Mico Mrkaic, Natalija Novta, Evgenia Pugacheva, Petia Topalova
- Published: August 16, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513509853.001
Key findings
- Empirical evidence and simulations of a dynamic general equilibrium model reveal that "good policies can help countries cope with negative weather shocks to some extent."
- "None of the adaptive policies we consider can fully eliminate the large aggregate output losses that countries with hot climates experience due to rising temperatures."
- "Only curbing greenhouse gas emissions—which would mitigate further global warming—could limit the adverse macroeconomic consequences of weather shocks in a long-lasting way."
Scope and approach
- Focus: the extent to which macroeconomic policies, structural policies, and institutions can mitigate the negative relationship between temperature shocks and output in countries with warm climates.
- Methods: empirical analysis and simulations using a dynamic general equilibrium model.
Policy implications and recommendations
- Strengthening macroeconomic policies, structural policies, and institutions can reduce vulnerability to temperature shocks, but these measures offer only partial protection.
- Adaptive policies analyzed do not fully prevent large aggregate output losses in hot-climate countries; reliance solely on adaptation is insufficient.
- Mitigation through curbing greenhouse gas emissions is necessary to limit the long-lasting adverse macroeconomic consequences of weather shocks.
Thematic tags and keywords (as provided)
- Climate change, Environment, Fiscal space, Greenhouse gas emissions, Infrastructure, Macrostructural analysis, National accounts, Public debt, Structural policies
- adaptation policy, Adaptation to climate change, climate adaptation Policy, Climate change, Climate policy, country, Global, Greenhouse gas emissions, Infrastructure, low income, low-income country, macroeconomic policy, open economy, policy, policy buffer, Policy buffer, policy measure, policy variable, Structural policies, suboptimal policy, Weather shock, WP
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- Working Paper