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Market-Based Solutions to Vital Economic Issues


Accelerating progress in social and environmental sustainability
Dec 3, 2018

Temperature and Growth: A Panel Analysis of the United States


We document that seasonal temperatures have significant and systematic effects on the U.S. economy, both at the aggregate level and across a wide cross section of economic sectors. This effect is particularly strong for the summer: a 1℉ increase in the average summer temperature is associated with a reduction in the annual growth rate of state‐level output of 0.15 to 0.25 percentage points. We combine our estimates with projected increases in seasonal temperatures and find that rising temperatures could reduce U.S. economic growth by up to one‐third over the next century.

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