International Trade and the Transmission of Temperature Shocks

Referierte Fachzeitschrift // forthcoming
Referierte Fachzeitschrift // forthcoming

International Trade and the Transmission of Temperature Shocks

We examine how the adverse impacts of weather shocks are distributed through the trade
network. Exploiting a rich, theoretically derived, fixed effects structure, we find signifi-
cant negative short-run effects of high temperature on exports. A month with an average
temperature above 30 °C implies export losses of around three percent. These effects are
increasing in the labour-intensity of exports. Using our structural Gravity model, we assess
the general equilibrium incidence of these temperature shocks. We find that equilibrium
adjustments reduce the economic costs by around 20 percent, but significant costs arise
also for countries not directly exposed to high temperatures.

Osberghaus, Daniel und Oliver Schenker (forthcoming), International Trade and the Transmission of Temperature Shocks, Environmental and Resource Economics