The asymmetric role of temperature deviations in economic growth: Fresh evidence from global countries and panel quantile estimates

Abstract

This work explores the role of weather shocks, measured as temperature deviations from their normal, in affecting GDP growth through a panel of 148 countries, spanning the period 1960–2019 and a panel quantile approach. The findings show that GDP growth is negatively affected by such deviations at higher quantiles, with the results receiving robust support from three alternative methodologies. The analysis also identifies two channels through which the findings receive further support, such as, the ‘heat-exposed’ sectors effect on labour productivity, and the impact of temperature deviations on the capital accumulation capacity. The results also survive the role of the country development status. Finally, the analysis identifies the role of the countries' geographical location. The results can have substantial merit for policymakers in terms of the role of climate conditions in the growth process, especially in poor countries.