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Working Paper
Weathering an Unexpected Financial Shock: The Role of Cash Grants on Household Finance and Business Survival
We estimate the causal effect of cash grants on household finance and business survival following a natural disaster. Disaster-affected individuals in high damage blocks with access to cash grants have 17% less credit card debt following the disaster than those without access to cash grants. Grants do not reduce negative financial outcomes, but do decrease migration. The grants play a role in mitigating the effects of the shock to businesses; resulting in 18% more establishments and 29% more employees post-disaster in disaster-affected neighborhoods where residents receive grants, relative to ...
Working Paper
Adaptation and the Cost of Rising Temperature for the U.S. Economy
How costly will rising temperature due to climate change be for the U.S. economy? Recent research has used the well-identified response of output to weather to estimate this cost. But agents may adapt to the new climate. We propose a methodology to infer adaptation technology from the heterogeneous responses of output to weather observed currently across the U.S. Our model estimates how much each region has adapted already, and can predict how much each will adapt further after climate change. The size and distribution of losses from climate change vary substantially once adaptation is taken ...
Working Paper
Probability Assessments of an Ice-Free Arctic: Comparing Statistical and Climate Model Projections
The downward trend in the amount of Arctic sea ice has a wide range of environmental and economic consequences including important effects on the pace and intensity of global climate change. Based on several decades of satellite data, we provide statistical forecasts of Arctic sea ice extent during the rest of this century. The best fitting statistical model indicates that overall sea ice coverage is declining at an increasing rate. By contrast, average projections from the CMIP5 global climate models foresee a gradual slowing of Arctic sea ice loss even in scenarios with high carbon ...
Working Paper
The Impact of Weather on Local Employment: Using Big Data on Small Places
This paper exploits vast granular data ? over 10 million county-industry-month observations ? to estimate dynamic panel data models of weather?s short-run employment effects. I estimated the contemporaneous and cumulative effects of temperature, precipitation, snowfall, the frequency of very hot days, the frequency of very cold days, and natural disasters on private nonfarm employment growth. The short-run effects of weather vary considerably across sectors and regions. Favorable weather in one county has positive spillovers to nearby counties but negative spillovers to distant counties. ...
Report
Disaster (over-)insurance: the long-term financial and socioeconomic consequences of Hurricane Katrina
Federal disaster insurance?in the form of national flood insurance, the Federal Emergency Management Agency (FEMA), and other programs?is designed to nationally-distribute large geography-specific shocks like earthquakes and hurricanes. This study examines the local longrun net impact of Hurricane Katrina and the subsequent policy response on impacted residents. Using a unique fifteen-year panel of five percent of adult Americans? credit reports, we find higher rates of insolvency and lower homeownership among inundated residents of New Orleans ten years after the storm, relative to their ...
Working Paper
Non-renewable resources, extraction technology, and endogenous growth
We document that global resource extraction has strongly increased with economic growth, while prices have exhibited stable trends for almost all major non-renewable resources from 1700 to 2018. Why have resources not become scarcer as suggested by standard economic theory? We develop a theory of extraction technology, geology and growth grounded in stylized facts. Rising resource demand incentivises firms to invest in new technology to increase their economically extractable reserves. Prices remain constant because increasing returns from the geological distribution of resources offset ...
Working Paper
Household Finance after a Natural Disaster: The Case of Hurricane Katrina
Little is known about how affected residents are able to cope with the fi nancial shock of a natural disaster. We investigate the impact that flooding from a major US hurricane had on household finance. Spikes in credit card borrowing and overall delinquency rates for the most flooded residents are modest in size and short-lived. Greater flooding results in larger reductions in total debt. Lower debt levels appear to be driven by homeowners using flood insurance to repay their mortgages rather than to rebuild. Debt reductions are larger in census tracts where mortgages were likely to be ...
Working Paper
Fair weather or foul? the macroeconomic effects of El Niño
This paper employs a dynamic multi-country framework to analyze the international macroeconomic transmission of El Nio weather shocks. This framework comprises 21 country/region-specific models, estimated over the period 1979Q2 to 2013Q1, and accounts for not only direct exposures of countries to El Nio shocks but also indirect effects through third-markets. We contribute to the climate-macroeconomy literature by exploiting exogenous variation in El Nio weather events over time, and their impact on different regions cross-sectionally, to causatively identify the effects of El Nio shocks on ...
Working Paper
Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis
We study the long-term impact of climate change on economic activity across countries, using a stochastic growth model where labor productivity is affected by country-specific climate variables?defined as deviations of temperature and precipitation from their historical norms. Using a panel data set of 174 countries over the years 1960 to 2014, we find that per-capita real output growth is adversely affected by persistent changes in the temperature above or below its historical norm, but we do not obtain any statistically significant effects for changes in precipitation. Our counterfactual ...
Working Paper
The Growth Effects of El Niño and La Niña: Local Weather Conditions Matter
This paper contributes to the climate-economy literature by analyzing the role of weather patterns in influencing the transmission of global climate cycles to economic growth. More specifically, we focus on El Niño Southern Oscillation (ENSO) events and their interactions with local weather conditions, taking into account the heterogeneous and cumulative effects of weather patterns on economic growth and the asymmetry and nonlinearity in the global influence of ENSO on economic activity. Using data on 75 countries over the period 1975-2014, we provide evidence for the negative growth effects ...