Macro seminar
Time : 12h15 – 13h30
Date : 08 Janvier 2024

Salle 3001

Sampreet Goraya (Stockholm School of Economics) “Climate Change, Firms and Aggregate Productivity”

Abstract:This paper presents a general equilibrium structural framework that separates the effects of temperature on firm-level demand, productivity, and input allocative efficiency to examine the aggregate productivity losses caused by climate change. By analyzing data from Italian firms, that cover approximately 75% of aggregate gross output, and incorporating detailed climate data, the paper reveals an inverted U-shaped relationship between temperature and firm-level outcomes such as productivity and revenue-based marginal product of capital. Leveraging these micro semi-elasticities, the paper projects the aggregate productivity losses resulting from climate change scenarios. The findings indicate a significant and nonlinear relationship between climate change and aggregate productivity, with a projected 2-degree Celsius increase leading to a 1.8% decline. Doubling the expected increase to 4 degrees exacerbates the decline nearly fourfold to approximately 6.4%. Finally, the analysis highlights widening regional disparities as a consequence of climate change.