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arXiv · 2102.13110

The economic impact of weather and climate

Richard S. J. Tol
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Abstract

I propose a new conceptual framework to disentangle the impacts of weather and climate on economic activity and growth: A stochastic frontier model with climate in the production frontier and weather shocks as a source of inefficiency. I test it on a sample of 160 countries over the period 1950-2014. Temperature and rainfall determine production possibilities in both rich and poor countries; positively in cold countries and negatively in hot ones. Weather anomalies reduce inefficiency in rich countries but increase inefficiency in poor and hot countries; and more so in countries with low weather variability. The climate effect is larger that the weather effect.

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Richard S. J. Tol. 2021-02-25. The economic impact of weather and climate. https://arxiv.org/abs/2102.13110

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