The Growth Effects of El Niño and La Niña: Local Weather Conditions Matter - Economic Research Forum (ERF)

The Growth Effects of El Niño and La Niña: Local Weather Conditions Matter

Cécile Couharde, Rémi Generoso, Olivier Damette and Kamiar Mohaddes


Date:
November, 2019

NO.
1367

Publisher:
Economic Research Forum

Topic:
C3. Multiple or Simultaneous Equation Models
Q5. Environmental Economics
O4. Economic Growth and Aggregate Productivity

This paper contributes to the climate-economy literature by analysing 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 of ENSO events and show that there are substantial differences between its warm (El Niño) and cold (La Niña) phases and between climate zones. These differences are due to the heterogeneity in weather responses to ENSO events, known as teleconnections, which has so far not been taken into account by economists, and which will become more important in the climate-economy relationship given that climate change may substantially strengthen long-distance relationships between weather patterns around the world. We also show that the negative growth effects associated with these teleconnections are robust to the definition of ENSO events and more important over shorter meteorological onsets.

Authors

Cécile Couharde

Professor of Economics, Université Paris Nanterre


Authors

Rémi Generoso

Assistant Professor of Economics, Université de Lille


Authors

Olivier Damette

Professor of Economics, Université de Lorraine


Research Fellows

Kamiar Mohaddes

Faculty of Economics & Girton College, University of Cambridge


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