GDP and temperature: Evidence on cross-country response heterogeneity

Abstract

We estimate individual country real GDP per capita growth responses to country, global, and idiosyncratic temperature shocks. Negative growth responses to country and global temperature at longer horizons are found for all Group of Seven countries. Positive country (global) responses are found for approximately eight (seven) of the nine poorest countries at longer horizons. Both country and idiosyncratic temperature shocks have more negative than positive effects on growth across countries, but it is more evenly split for the global temperature shock. After controlling for average temperature, positive growth responses to global temperature shocks are more likely for countries that are poorer, have experienced slower growth, are more educated (higher high school attainment), and more open to trade.