2021/02/25 by Richard S. J. Tol, Tol, Richard S. J. · 2 citations
Economics, Econometrics and Finance · #FOS: Economics and business #General Economics (econ.GN) #econ.GN #q-fin.EC
paper · pdf · doi:10.48550/arxiv.2102.13110
arxiv created 2021/05/05 · arxiv updated 2021/05/07
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.