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

Suggested Citation

Liddle, Brant, Warming and GDP Growth in the United States: A Heterogeneous, Common Factor Dynamic Panel Analysis (August 6, 2017). 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)., Available at SSRN: https://ssrn.com/abstract=3014379 or http://dx.doi.org/10.2139/ssrn.3014379

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