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Income and temperatures: Working paper series--10-06

Ng, Pin and Zhao, Xiaobing (2010) Income and temperatures: Working paper series--10-06. Working Paper. NAU W.A. Franke College of Business.


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The contemporaneous relationship between temperature and income is important because it enables economists to estimate the economic impact of global warming without assuming a structural model. Until recently, empirical evidence generally suggests that there is a negative relationship between temperature and income, and therefore global warming has an adverse impact on economic activity. However, recently Nordhaus (2006) finds that the temperature-income relationship depends on how income is measured. We show in this paper that the results of Nordhaus (2006) may be due to a model misspecification or an omitted-variable problem. Based on a well-motivated temperature-income model, we find that the relationship between temperature and income is not dependent on income measurement. Our regression results show that the adverse impact of an increase of 3 degrees Celsius in temperature can be as much as a 9% decrease in income for developed nations such as the United States and the United Kingdom. Therefore, our results suggest more aggressive climate mitigation policy.

Item Type: Monograph (Working Paper)
Publisher’s Statement: Copyright, where appropriate, is held by the author.
ID number or DOI: 10-06
Keywords: Working paper, Temperature, Income, Global Warming, Quantile Regression
Subjects: G Geography. Anthropology. Recreation > GF Human ecology. Anthropogeography
H Social Sciences > HC Economic History and Conditions
NAU Depositing Author Academic Status: Faculty/Staff
Department/Unit: The W.A. Franke College of Business
Date Deposited: 17 Oct 2015 20:31
URI: http://openknowledge.nau.edu/id/eprint/1497

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