{
  "title": "Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis",
  "publication": "IMF Working Papers, October 11, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2019/10/11/long-term-macroeconomic-effects-of-climate-change-a-cross-country-analysis-48691",
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  "summary": "We study the long-term impact of climate change on economic activity across countries, using a stochastic growth model where labor productivity is affected by country-specific climate variables—defined as deviations of temperature and precipitation from their historical norms.",
  "sections": [
    {
      "heading": "Research question and approach",
      "content": "- Uses a stochastic growth model where labor productivity is affected by country-specific climate variables defined as deviations of temperature and precipitation from their historical norms.\n- Empirical analysis based on a panel data set of 174 countries over the years 1960 to 2014.\n- Supplementary analysis using data on a sample of 48 U.S. states between 1963 and 2016."
    },
    {
      "heading": "Key empirical findings",
      "content": "- Per-capita real output growth is adversely affected by persistent changes in temperature above or below its historical norm.\n- No statistically significant effects detected for changes in precipitation.\n- Climate change has a long-lasting adverse impact on real output in various U.S. states and economic sectors, and on labor productivity and employment (based on the 48-state sample)."
    },
    {
      "heading": "Counterfactual projections",
      "content": "- A persistent increase in average global temperature by 0.04°C per year, in the absence of mitigation policies, reduces world real GDP per capita by more than 7 percent by 2100.\n- Abiding by the Paris Agreement, thereby limiting the temperature increase to 0.01°C per annum, reduces the loss substantially to about 1 percent by 2100.\n- Effects vary significantly across countries depending on the pace of temperature increases and variability of climate conditions."
    },
    {
      "heading": "Policy-relevant implications (as presented)",
      "content": "- Mitigation that limits temperature increases (for example, the Paris Agreement trajectory of 0.01°C per annum) substantially reduces projected long-term losses to world real GDP per capita compared with an unabated trajectory of 0.04°C per year.\n- Cross-country heterogeneity in impacts implies that the pace of temperature increases and climate variability should inform country-specific assessments and responses."
    },
    {
      "heading": "Scope and limitations (as presented)",
      "content": "- Analysis covers 174 countries from 1960 to 2014 and a supplementary U.S. state sample from 1963 to 2016.\n- Precipitation changes were not found to have statistically significant effects in the cross-country panel.\n\nIMF Working Paper — \"Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis\" (Working Paper No. 2019/215), October 11, 2019.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/10/11/long-term-macroeconomic-effects-of-climate-change-a-cross-country-analysis-48691"
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    "Authors: Matthew E. Kahn, Kamiar Mohaddes, Ryan N. C. Ng, M. Hashem Pesaran, Mehdi Raissi, Jui-Chung Yang",
    "Published: October 11, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513514598.001",
    "Uses a stochastic growth model where labor productivity is affected by country-specific climate variables defined as deviations of temperature and precipitation from their historical norms.",
    "Empirical analysis based on a panel data set of 174 countries over the years 1960 to 2014.",
    "Supplementary analysis using data on a sample of 48 U.S. states between 1963 and 2016.",
    "Per-capita real output growth is adversely affected by persistent changes in temperature above or below its historical norm.",
    "No statistically significant effects detected for changes in precipitation.",
    "Climate change has a long-lasting adverse impact on real output in various U.S. states and economic sectors, and on labor productivity and employment (based on the 48-state sample).",
    "A persistent increase in average global temperature by 0.04°C per year, in the absence of mitigation policies, reduces world real GDP per capita by more than 7 percent by 2100.",
    "Abiding by the Paris Agreement, thereby limiting the temperature increase to 0.01°C per annum, reduces the loss substantially to about 1 percent by 2100.",
    "Effects vary significantly across countries depending on the pace of temperature increases and variability of climate conditions.",
    "Mitigation that limits temperature increases (for example, the Paris Agreement trajectory of 0.01°C per annum) substantially reduces projected long-term losses to world real GDP per capita compared with an unabated trajectory of 0.04°C per year.",
    "Cross-country heterogeneity in impacts implies that the pace of temperature increases and climate variability should inform country-specific assessments and responses.",
    "Analysis covers 174 countries from 1960 to 2014 and a supplementary U.S. state sample from 1963 to 2016.",
    "Precipitation changes were not found to have statistically significant effects in the cross-country panel.",
    "**Working Paper**"
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