Work

Climate shocks, economic activity and cross-country spillovers: Evidence from a new global model

Year: 2025

Type: article

Abstract: This study investigates the impact of climate shocks on economic activity, addressing the gap in the literature of climate change economics. Using data covering a time span of 59 years, from 1960 to 2019, we employ a new global model to examine the effects of temperature and precipitation shocks on real output across 33 countries, accounting for more than 90% of the world’s gross domestic product. Our analysis reveals that hotter and less-developed countries are more exposed to temperature shocks. Moreover, only some colder and more developed countries show a contraction of output in the medium-long run. Our results highlight trade interconnections as the main channel of propagation of climate shocks into the economic system . This study offers new insights into the transmission mechanism of climate shocks and suggests the adoption of climate policies at both global and local levels.

Source: Economic Modelling

DOI: 10.1016/j.econmod.2025.107082

Authors: Maryam Ahmadi, Chiara Casoli, Matteo Manera, Daniele Valenti

Institutions: University of Insubria, Fondazione Eni Enrico Mattei, University of Milano-Bicocca, Politecnico di Milano

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Climate action, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,660