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When Forecasts Meet Reality

Year: 2026

Type: article

Abstract: This paper assesses estimates of the economic impacts of climate change by leveraging the IMF’s World Economic Outlook (WEO) forecasts (1990-2023) as climate-free counterfactuals. Placebo tests confirm WEO forecasts do not capture climate effects. By adding climate damage estimates to forecasts and comparing with actual GDP growth, we find climate damage functions explain only a small share of forecast errors—reducing mean absolute errors by up to 0.4 percentage points (about 6% of the forecast error). The most severe damage functions predict contractions in some countries that are inconsistent with observed growth, suggesting overstated near-term climate impacts.

Source: IMF Working Paper

DOI: 10.5089/9798229043823.001

Authors: Johannes Emmerling, Paul Waidelich, Matthieu Bellon, Emanuele Massetti

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: diamond

OpenAlex ID: W7160187489

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