Uneven Economic Consequences of Climate Variability: Temperature,Precipitation, and Growth Disparities Across Countries
Keywords:
Climate variability, non- linear specifications, GDP, Uneven EconomicAbstract
Climate variability may impact the economy in an unequal way between countries due to the differential exposure, adaptive capability and structural characteristics between countries. Based on a cross-country panel of 2,462 country-year observations for 165 countries from 2000 to 2014, this study investigates the impact of temperature and precipitation variability on economic growth. The techniques used were descriptive statistics, correlations, fixed-effects and random-effects panel regressions, income group interactions, non-linear specifications, and lagged models. The findings indicated that GDP growth had a negative correlation with mean temperature, although it was not statistically significant. The overall temperature and precipitation variability did not have a strong impact, but there was a stronger negative relationship between variability in temperature one year prior and economic growth one year after. Income-group comparisons also suggested that the response patterns differed between higher-income and lower-income countries, with lower-income countries being more sensitive to temperature variability, having stronger negative responses. There were moderate nonlinear effects. The results indicate a heterogeneous impact of climate variability on the economy, which can be delayed in time. The study emphasizes the need for climate-resilient infrastructure, adaptive capacity, and policy support, particularly for less economically resilient countries.
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