Published in:World Bank Policy Research Working Paper ; No. 8888
Extent:
1 Online-Ressource (22 p)
Language:
English
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 17, 2019 erstellt
Description:
Much micro-econometric evidence suggests that precipitation has wide ranging impacts on vital economic indicators such as agricultural yields, human capital, and even conflict. And yet paradoxically most macro-econometric evidence (especially in the climate economy literature) finds that precipitation has no robust and significant impact on various measures of aggregate economic output. This paper argues that spatial aggregation of weather at the country level explains this result. The paper uses annual subnational gross domestic product data to show a concave relationship between precipitation and local gross domestic product growth between 1990 and 2014. It then demonstrates that when the data are aggregated at larger spatial scales, the impact decreases and eventually vanishes. The impact of precipitation on aggregate economic activity is predominantly felt in developing countries; it is insignificant in developed countries. Agriculture is found to be the dominant pathway. The results have significant consequences for measuring the economic impacts of climate change