[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/fem/femwpa/2022.46.html
   My bibliography  Save this paper

Modelling the effects of climate change on economic growth: a Bayesian Structural Global Vector Autoregressive approach

Author

Listed:
  • Maryam Ahmadi

    (Fondazione Eni Enrico Mattei)

  • Chiara Casoli

    (Fondazione Eni Enrico Mattei)

  • Matteo Manera

    (Fondazione Eni Enrico Mattei and Department of Economics, Management and Statistics – DEMS, University of Milano-Bicocca)

  • Daniele Valenti

    (Fondazione Eni Enrico Mattei and Department of Environmental Science and Policy – DESP, University of Milano)

Abstract
The identification of the effects of climate shocks on economic growth is central to design effective policies aiming at managing the future global climate change challenge. In this study, we investigate the effects of temperature and precipitation shocks on economic growth across different countries by means of a new methodology, namely a Bayesian Structural Global VARX model. This setup accommodates economic interpretation of the shocks and accounts for crosssectional spillovers among countries, as well as endogeneity of the climate variables with respect to the economy. Results show a high degree of heterogeneity, with some economies positively and some others negatively affected by climate shocks. In contrast with a consistent strand of the literature, according to which hot and poor countries bear the heaviest burden, we show that climate shocks may have severe effects for the economic growth of rich and cold countries as well. Furthermore, accounting for trade interdependence across countries, we document that, in response to unexpected temperature and precipitation shocks, some economies benefit from interconnections, while some others are damaged, depending on some key structural characteristics as the import-export mix, the relevant trade partners network and the level of economic development.

Suggested Citation

  • Maryam Ahmadi & Chiara Casoli & Matteo Manera & Daniele Valenti, 2022. "Modelling the effects of climate change on economic growth: a Bayesian Structural Global Vector Autoregressive approach," Working Papers 2022.46, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2022.46
    as

    Download full text from publisher

    File URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2022-046.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard S J Tol, 2018. "The Economic Impacts of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 4-25.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pratik Thakkar & Kausik Gangopadhyay & Rupayan Pal, 2023. "Temperature shock and economic growth: Does spillover effect hurt more?," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2023-014, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Emanuele Bacchiocchi & Andrea Bastianin & Graziano Moramarco, 2024. "Macroeconomic Spillovers of Weather Shocks across U.S. States," Working Papers 2024.09, Fondazione Eni Enrico Mattei.
    3. Paulo M. M. Rodrigues & Mirjam Salish & Nazarii Salish, 2024. "Saving for sunny days: The impact of climate (change) on consumer prices in the euro area," Papers 2401.03740, arXiv.org.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joaquín Bernal-Ramírez & Jair Ojeda-Joya & Camila Agudelo-Rivera & Felipe Clavijo-Ramírez & Carolina Durana-Ángel & Clark Granger-Castaño & Daniel Osorio-Rodríguez & Daniel Parra-Amado & José Pulido &, 2022. "Impacto macroeconómico del cambio climático en Colombia," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, issue 102, pages 1-62, July.
    2. Alessandro Moro, 2021. "Can capital controls promote green investments in developing countries?," Temi di discussione (Economic working papers) 1348, Bank of Italy, Economic Research and International Relations Area.
    3. Martin Henseler & Ingmar Schumacher, 2019. "The impact of weather on economic growth and its production factors," Climatic Change, Springer, vol. 154(3), pages 417-433, June.
    4. Brown, Marilyn A. & Li, Yufei & Soni, Anmol, 2020. "Are all jobs created equal? Regional employment impacts of a U.S. carbon tax," Applied Energy, Elsevier, vol. 262(C).
    5. Dinar, Ariel, 2012. "Economy-wide implications of direct and indirect policy interventions in the water sector: lessons from recent work and future research needs," Policy Research Working Paper Series 6068, The World Bank.
    6. Sassi, Maria & Cardaci, Alberto, 2013. "Impact of rainfall pattern on cereal market and food security in Sudan: Stochastic approach and CGE model," Food Policy, Elsevier, vol. 43(C), pages 321-331.
    7. L. Oosterhout & E. Koks & P. Beukering & S. Schep & T. Tiggeloven & S. Manen & M. Knaap & C. Duinmeijer & S. L. Buijs, 2023. "An Integrated Assessment of Climate Change Impacts and Implications on Bonaire," Economics of Disasters and Climate Change, Springer, vol. 7(2), pages 147-178, July.
    8. João Tovar Jalles, 2024. "Financial Crises and Climate Change," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(1), pages 166-190, March.
    9. Guo, Jiaqi & Wang, Qiang & Li, Rongrong, 2024. "Can official development assistance promote renewable energy in sub-Saharan Africa countries? A matter of institutional transparency of recipient countries," Energy Policy, Elsevier, vol. 186(C).
    10. Cristina Cattaneo & Emanuele Massetti, 2019. "Does Harmful Climate Increase Or Decrease Migration? Evidence From Rural Households In Nigeria," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(04), pages 1-36, November.
    11. Nicolas Taconet & Aurélie Méjean & Céline Guivarch, 2020. "Influence of climate change impacts and mitigation costs on inequality between countries," Climatic Change, Springer, vol. 160(1), pages 15-34, May.
    12. Tol, Richard S.J., 2012. "A cost–benefit analysis of the EU 20/20/2020 package," Energy Policy, Elsevier, vol. 49(C), pages 288-295.
    13. Pindyck, Robert S., 2012. "Uncertain outcomes and climate change policy," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 289-303.
    14. Ary José A. de Souza-Jr. & Flávio Terto, 2021. "The propensity to adaptation under the new era of climate changes," Working Papers REM 2021/0167, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    15. Helena Fornwagner & Oliver P. Hauser, 2022. "Climate Action for (My) Children," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(1), pages 95-130, January.
    16. Gilles Dufrénot & William Ginn & Marc Pourroy, 2023. "ENSO Climate Patterns on Global Economic Conditions," AMSE Working Papers 2308, Aix-Marseille School of Economics, France.
    17. Richard S. J. Tol, 2021. "The Economic Impact of Climate in the Long Run," World Scientific Book Chapters, in: Anil Markandya & Dirk Rübbelke (ed.), CLIMATE AND DEVELOPMENT, chapter 1, pages 3-36, World Scientific Publishing Co. Pte. Ltd..
    18. Angela Rosa & Angela Santangelo & Simona Tondelli, 2021. "Investigating the Integration of Cultural Heritage Disaster Risk Management into Urban Planning Tools. The Ravenna Case Study," Sustainability, MDPI, vol. 13(2), pages 1-24, January.
    19. Francesco Bosello & Carlo Orecchia & David A. Raitzer, 2016. "Decarbonization Pathways in Southeast Asia: New Results for Indonesia, Malaysia, Philippines, Thailand and Viet Nam," Working Papers 2016.75, Fondazione Eni Enrico Mattei.
    20. Robert S. Pindyck, 2011. "Modeling the Impact of Warming in Climate Change Economics," NBER Chapters, in: The Economics of Climate Change: Adaptations Past and Present, pages 47-71, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Climate econometrics; Bayesian Structural VARs; Identification theory; Global VARs;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fem:femwpa:2022.46. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alberto Prina Cerai (email available below). General contact details of provider: https://edirc.repec.org/data/feemmit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.