This research estimates that a one-degree increase in temperatures reduces GDP growth by between 0.15% and 0.25%
I don't know much about how these estimates are done, but these effects are significant if true. 1/
I don't know much about how these estimates are done, but these effects are significant if true. 1/
Put this into a little context.
When we model, say, Trump's tariffs, we estimate that the level of GDP declines by 0.6%. This means that eventually GDP is going to permanently be 0.6% lower than otherwise. The growth rate, however, doesn't permanently change 2/
When we model, say, Trump's tariffs, we estimate that the level of GDP declines by 0.6%. This means that eventually GDP is going to permanently be 0.6% lower than otherwise. The growth rate, however, doesn't permanently change 2/
These results imply a drop in the growth rate by 0.15 percentage points! That means GDP will be lower than otherwise each year and the output gap will continue to grow as time goes on.
In ten years, GDP will be ~1.5% lower and in twenty, GDP will be 2.9% lower, and so on. 3/
In ten years, GDP will be ~1.5% lower and in twenty, GDP will be 2.9% lower, and so on. 3/
I don't have a good sense of whether these numbers are reasonable, but whenever you see an estimate implying a permanent drop in the growth *rate*, it implies a very large economic effect. 4/4
