Does Rainfall Matter for Economic Growth? Evidence from Global Sub-National Data (1990-2014)
Much micro-econometric evidence suggests that precipitation has wide ranging impacts on vital economic indicators such as agricultural yields, human capital, and even conflict. And yet paradoxically most macro-econometric evidence (especially in th...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/368581560778208239/Does-Rainfall-Matter-for-Economic-Growth-Evidence-from-Global-Sub-National-Data-1990-2014 http://hdl.handle.net/10986/31901 |
| Summary: | Much micro-econometric evidence suggests
that precipitation has wide ranging impacts on vital
economic indicators such as agricultural yields, human
capital, and even conflict. And yet paradoxically most
macro-econometric evidence (especially in the climate
economy literature) finds that precipitation has no robust
and significant impact on various measures of aggregate
economic output. This paper argues that spatial aggregation
of weather at the country level explains this result. The
paper uses annual subnational gross domestic product data to
show a concave relationship between precipitation and local
gross domestic product growth between 1990 and 2014. It then
demonstrates that when the data are aggregated at larger
spatial scales, the impact decreases and eventually
vanishes. The impact of precipitation on aggregate economic
activity is predominantly felt in developing countries; it
is insignificant in developed countries. Agriculture is
found to be the dominant pathway. The results have
significant consequences for measuring the economic impacts
of climate change. |
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