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Market-Based Solutions to Vital Economic Issues
Research
Mar 30, 2018

Temperatures and Growth: A Panel Analysis of the United States

Abstract

We document that seasonal temperatures have significant and systematic effects on the U.S. economy, both at the aggregate level and across a wide cross-section of economic sectors. This effect is particularly strong for the summer: a 1F increase in the average summer temperature is associated with a reduction in the annual growth rate of state-level output of 0.15 to 0.25 percentage points. We combine our estimates with projected increases in seasonal temperatures and find that rising temperatures could reduce U.S. economic growth by up to one-third over the next century.

Note: Research papers posted on SSRN, including any findings, may differ from the final version chosen for publication in academic journals.


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