Discussion paper

DP16194 Estimating the Consequences of Climate Change from Variation in Weather

I formally relate the consequences of climate change to the panel variation in weather extensively explored by recent empirical literature. I show that short-run responses to weather shocks differ from long-run responses to climate change when payoffs depend on a capital or resource stock. I develop a new indirect least squares estimator that bounds long-run climate impacts from short-run responses to weather. Applying this new method, I find that an additional 2 degrees Celsius of global warming would eliminate profits from the average acre of current farmland in the eastern U.S.

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Citation

Lemoine, D (2021), ‘DP16194 Estimating the Consequences of Climate Change from Variation in Weather‘, CEPR Discussion Paper No. 16194. CEPR Press, Paris & London. https://cepr.org/publications/dp16194