Journal of Economic Literature
ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)
What Do We Learn from the Weather? The New Climate-Economy Literature
Journal of Economic Literature
vol. 52,
no. 3, September 2014
(pp. 740–98)
Abstract
A rapidly growing body of research applies panel methods to examine how temperature, precipitation, and windstorms influence economic outcomes. These studies focus on changes in weather realizations over time within a given spatial area and demonstrate impacts on agricultural output, industrial output, labor productivity, energy demand, health, conflict, and economic growth, among other outcomes. By harnessing exogenous variation over time within a given spatial unit, these studies help credibly identify (i) the breadth of channels linking weather and the economy, (ii) heterogeneous treatment effects across different types of locations, and (iii) nonlinear effects of weather variables. This paper reviews the new literature with two purposes. First, we summarize recent work, providing a guide to its methodologies, datasets, and findings. Second, we consider applications of the new literature, including insights for the "damage function" within models that seek to assess the potential economic effects of future climate change.Citation
Dell, Melissa, Benjamin F. Jones, and Benjamin A. Olken. 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature." Journal of Economic Literature, 52 (3): 740–98. DOI: 10.1257/jel.52.3.740Additional Materials
JEL Classification
- C51 Model Construction and Estimation
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- Q51 Valuation of Environmental Effects
- Q54 Climate; Natural Disasters; Global Warming