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Federal Reserve Bank of Richmond
Working Paper
Temperature and Growth: A Panel Analysis of the United States
Riccardo Colacito
Bridget Hoffman
Toan Phan
Abstract

We document that seasonal temperatures have significant and systematic effects on the U.S. economy, both at the aggregate level and across a wide cross-section of economic sectors. This effect is particularly strong for the summer: a 1 degree F increase in the average summer temperature is associated with a reduction in the annual growth rate of state-level output of 0.15 to 0.25 percentage points. We combine our estimates with projected increases in seasonal temperatures and find that rising temperatures could reduce U.S. economic growth by up to one-third over the next century.


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Riccardo Colacito & Bridget Hoffman & Toan Phan, Temperature and Growth: A Panel Analysis of the United States, Federal Reserve Bank of Richmond, Working Paper 18-9, 11 Apr 2018.
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Keywords: economic growth; temperature; climate change
For corrections, contact Christian Pascasio ()
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