Climate Change and Economic Growth: Evidence from the Last Half-Century
with Melissa Dell and Ben Olken
Abstract: This paper uses annual variation in climate to examine the impact of temperature and precipitation on national economies. We find three primary results. First, higher temperatures substantially reduce economic growth in poor countries. Second, higher temperatures appear to reduce growth rates, not just the level of output. Third, higher temperatures have wide-ranging effects, reducing agricultural and industrial output, investment, innovation, and political stability. Decade or longer increases in temperature also show substantial negative effects on poor countries’ growth. These findings inform debates over climate’s role in economic development and suggest substantial negative impacts of future climate change on poor countries.