{"id":58278,"date":"2021-12-17T00:01:00","date_gmt":"2021-12-17T00:01:00","guid":{"rendered":"https:\/\/www.lse.ac.uk\/granthaminstitute\/?post_type=publication&p=58278"},"modified":"2024-09-18T16:59:44","modified_gmt":"2024-09-18T15:59:44","slug":"seasonal-temperature-variability-and-economic-cycles-2","status":"publish","type":"publication","link":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/seasonal-temperature-variability-and-economic-cycles-2\/","title":{"rendered":"Seasonal temperature variability and economic cycles"},"content":{"rendered":"\n

In many countries, gross domestic product (GDP) varies by several per cent from quarter to quarter. For example, in the UK between 1990 and 2018 total production in the second quarter was on average about 5 per cent smaller than in the fourth quarter. Economists have long suspected that temperature is one driver of these fluctuations but their models typically have focused on only one country and on proximate factors such as preferences and production technologies, without attributing those proximate factors to fundamental drivers. Because the influence of temperature has not been explicitly examined, it has remained unknown – but as climate change is projected to change the seasonality of temperature, the question appears very relevant.<\/p>\n\n\n\n

In this paper, the author assembles a new set of quarterly and six-monthly temperature and GDP data for 98 countries and develops a new estimation strategy to attribute observed fluctuations in GDP to changes in temperature.<\/p>\n\n\n\n

The results show a much larger diversity of seasonal cycles of GDP around the world than previously reported and suggest that differences in temperature between summer and winter can explain a major part of the observed differences in GDP between these seasons. This finding is in contrast to previous work, which concluded that temperature plays at most a minor role for seasonal cycles of GDP. For a small sample of European economies, the effect of temperature can be attributed to sectors in which production is relatively exposed to ambient temperature.<\/p>\n\n\n\n

Key points for decision-makers<\/h2>\n\n\n\n