Warming and GDP Growth in the United States: A Heterogeneous, Common Factor Dynamic Panel Analysis
USAEE Working Paper No. 17-316
Liddle, B. 2018. Warming and Income Growth in the United States: A Heterogeneous, Common Factor Dynamic Panel Analysis. Climate Change Economics, Vol 9(4).
21 Pages Posted: 8 Aug 2017 Last revised: 21 Nov 2020
Date Written: August 6, 2017
Abstract
This paper analyzes whether temperature changes influence economic growth in the contiguous 48 US states by employing panel methods that address both heterogeneity and cross-sectional dependence. Ultimately, it is determined that the negative effect of warming (proxied by cooling degree days) is restricted to agriculture GDP and found in only a few (mostly northern and more agriculturally dependent) states. But when weathers’ impact was measured by average summer temperature, the negative effect — still restricted to agriculture GDP — was substantially and significantly larger (a finding similar to previous work) and more geographically uniform.
Keywords: Climate Change, Economic Growth, Agriculture, Common Factor Panel Models
JEL Classification: C33, O44, Q51, Q54, R11
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