Temperature and Exports: Evidence from the United States

Abstract

This paper estimates the effect of exogenous short-term temperature changes on the economy of the United States, using high-resolution data on monthly exports which has not been previously exploited in the literature. The detailed disaggregation of U.S. export data into sectors enables a top-down estimation of the net effect of temperature, while also identifying potential mechanisms at the micro level. Using an econometric specification which allows high parametric flexibility, I find significantly negative effects of both high and low temperatures. The magnitude of the effects corresponds to an average reduction of annual U.S. exports by 0.20%, following a uniform 2 ∘C temperature increase. Industry heterogeneity in the temperature effect suggests disparate mechanisms behind hot and cold days, which are important to take into account when estimating the future economic damages of climate change in the United States.