American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Estimating Macrofiscal Effects of Climate Shocks from Billions of Geospatial Weather Observations
American Economic Journal: Macroeconomics
(pp. 114–59)
Abstract
The literature studying the macroeconomics of weather has focused on temperature and precipitation annual averages, while microstudies have focused more on extreme weather measures. We construct hundreds of variables from high-frequency, high-spatial-resolution weather measurements. Using the LASSO, we identify the parsimonious subset of variables that can best explain GDP and key macrofiscal variables. We find that scarcer mild temperatures and an increase in the occurrence of high temperatures and severe droughts reduce GDP. These variables substantially improve the share of GDP variations explained by weather. Additional evidence suggests that fiscal policy mitigates these shocks.Citation
Akyapı, Berkay, Matthieu Bellon, and Emanuele Massetti. 2025. "Estimating Macrofiscal Effects of Climate Shocks from Billions of Geospatial Weather Observations." American Economic Journal: Macroeconomics 17 (3): 114–59. DOI: 10.1257/mac.20230042Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- E62 Fiscal Policy
- O44 Environment and Growth
- Q54 Climate; Natural Disasters and Their Management; Global Warming
- Q56 Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth