A0576
Title: Climate growth-at-risk
Authors: Damiano Di Francesco - Sant\'Anna School of Advanced Studies (Italy) [presenting]
Francesco Lamperti - Sant Anna School of Advanced Studies (Italy)
Christian Brownlees - UPF (Spain)
Abstract: A comprehensive analysis of how climate shocks dynamically influence the entire forecast distribution of GDP growth is offered. This approach is called climate growth-at-risk (Climate GaR). While recent literature on the macroeconomic effects of climate change predominantly focuses on the average trajectory of GDP growth, the dynamic tail risks triggered by climate change have not been adequately addressed. Climate GaR seeks to bridge this gap by allowing for asymmetric impacts across different regions of the GDP growth distribution. Panel quantile local projections are employed on a large panel of countries from 1960 to 2019, finding suggestive evidence that climate shocks negatively affect downside risks to real activity outcomes, especially in the medium term. In analyzing the impacts of climate shocks on GaR across different countries, heterogeneity is revealed in responses between wealthier and poorer nations, as well as between countries with low and high agricultural intensity. By doing so, novel insights are provided into how climate change poses asymmetric risks to the economy, emphasizing the need for policy frameworks to address and mitigate these heightened vulnerabilities.
