IMF Working Papers

Weather Shocks and Output in Low-Income Countries: The Role of Policies and Adaptation

By Sebastian Acevedo Mejia, Claudio Baccianti, Mico Mrkaic, Natalija Novta, Evgenia Pugacheva, Petia Topalova

August 16, 2019

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Sebastian Acevedo Mejia, Claudio Baccianti, Mico Mrkaic, Natalija Novta, Evgenia Pugacheva, and Petia Topalova. Weather Shocks and Output in Low-Income Countries: The Role of Policies and Adaptation, (USA: International Monetary Fund, 2019) accessed September 19, 2024

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Summary

We explore 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. 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. However, 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.

Subject: Climate change, Environment, Fiscal space, Greenhouse gas emissions, Infrastructure, Macrostructural analysis, National accounts, Public debt, Structural policies

Keywords: 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

Publication Details

  • Pages:

    34

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

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  • Series:

    Working Paper No. 2019/178

  • Stock No:

    WPIEA2019178

  • ISBN:

    9781513509853

  • ISSN:

    1018-5941