Working Paper: NBER ID: w24893
Authors: Laura Bakkensen; Lint Barrage
Abstract: Empirical analyses of climatic event impacts on growth, while critical for policy, have been slow to be incorporated into macroeconomic climate-economy models. This paper proposes a joint empirical-structural approach to bridge this gap for tropical cyclones. First, we review competing empirical approaches in a harmonized global dataset and through a theory lens. Second, we estimate cyclone impacts on structural determinants of growth (productivity, depreciation, fatalities) to quantify a stochastic growth model for 40 vulnerable countries and project welfare effects of climate-driven cyclone risk changes. Third, we compute cyclone impacts on the social cost of carbon in the seminal DICE model.
Keywords: climate change; cyclones; economic growth; structural models; empirical analysis
JEL Codes: O44; O47; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cyclone strikes (Q54) | total factor productivity (TFP) (D24) |
| cyclone strikes (Q54) | capital depreciation (D25) |
| cyclone strikes (Q54) | fatalities (J17) |
| increased cyclone risk (Q54) | higher savings rates (D14) |
| increased cyclone risk (Q54) | lower average growth (O49) |
| cyclone impacts (Q54) | long-term implications for growth trajectories (F62) |
| aggregate addition to global climate damages (Q54) | modest impact (F69) |
| higher cyclone wind speeds (Q54) | increased economic losses (F69) |
| higher cyclone wind speeds (Q54) | increased fatalities (I12) |