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Dynamics of temperatures and economic activity in Italy: a long-term analysis

Author

Listed:
  • Michele Brunetti

    (Institute of Atmospheric Sciences and Climate, CNR-ISAC)

  • Matteo Gomellini

    (Bank of Italy)

  • Paolo Croce

    (Bank of Italy)

  • paolo Piselli

    (Bank of Italy)

Abstract
This paper reconstructs the dynamics of temperatures at the provincial level in Italy since the end of the 19th century and estimates their effects on the economy. The analysis spans a long period of time using ten-year average data that allow us to appreciate the impact of the temperature increases that can be attributed to changes in climate rather than to short-term meteorological variability. We find that average temperatures in Italy have increased by about 2°C since the beginning of the twentieth century with homogeneous growth trends across regions. The estimates of the relationship between economic growth and temperatures are made using two different empirical methodologies (panel data and autoregressive distributed lags, ARDL) and show how global warming has had negative repercussions on the Italian economy that became more pronounced at the end of twentieth century. These estimates are used to assess the potential impacts of future temperature increases. More specifically, based on our analysis, further increases that would bring average temperatures in 2100 to +1.5°C higher than today (a scenario corresponding to 'intermediate' greenhouse gas emissions) would reduce economic growth, leading to a level of per capita GDP between 2.8 and 9.5 per cent lower than under a +2 per cent growth scenario (i.e. the pace recorded since the beginning of the twentieth century).

Suggested Citation

  • Michele Brunetti & Matteo Gomellini & Paolo Croce & paolo Piselli, 2023. "Dynamics of temperatures and economic activity in Italy: a long-term analysis," Questioni di Economia e Finanza (Occasional Papers) 787, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_787_23
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    climate change; economic growth; long run;
    All these keywords.

    JEL classification:

    • N00 - Economic History - - General - - - General
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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