FEEM working papers "Note di lavoro" series
2015 .039

Weather and Income: Lessons from the Main European Regions


Authors: David García-León
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Keywords: Economic Growth, Weather, Ricardian Analysis, Developed Economies, Climate Change, Adaptation, NUTS
JEL n.: O1, O4, Q51, Q54, Q59, R11

Abstract

Some recent papers by Dell et al. (2009) and Dell et al. (2012) (DJO) relating weather and economic outcomes, have delivered meaningful messages with clear implications to the effects of a changing climate. In a nutshell, the authors claim that a 1°C increase in global average temperatures would harm both the level and growth capacities of relatively poor countries, leaving rich countries basically unaffected. In this study, we make use of a detailed weather and economic dataset covering the main regions of the five largest economies in the Euro area in an attempt to refute the previous affirmation. In particular, we find in our sample that global warming affects, although in a modest manner, all regions within well-developed countries in the long-term (level effect). As in DJO, the level effect in poor regions is exacerbated. The latter regions also suffer from a slight negative short-term effect (growth effect). We claim also that the larger short-time response of these regions to a climate shock is partially adapted in the long-run.

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Suggested citation: García-León, D., (2015), 'Weather and Income: Lessons from the Main European Regions', Nota di Lavoro 39.2015, Milan, Italy: Fondazione Eni Enrico Mattei

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