Temperature and Economic Growth: Comment on the Published Article by Kiley

In 2023 I published in Econ Journal Watch a critique of a 2021 Federal Reserve working paper by Michael Kiley, a paper on the effect of temperature on economic growth. Here I critique Kiley’s revised version as published in Economic Inquiry in 2024, which neither mentions my original critique nor adequately answers it. Problems I previously identified are unaddressed in Kiley (2024), and the robustness checks added in Kiley (2024) are flawed. Much of Kiley (2024) is identical to Kiley (2021). The 2024 version adds discussion and a scatterplot that is very similar to a scatterplot in Barker (2023). Also added is section 3.3 titled “Robustness checks,” in which Kiley (2024) does three things: he uses detrended per capita GDP as the dependent variable, he experiments with leaving out controls for country-specific quadratic trends, and he attempts to deal with outlier observations. The present critique disputes these added robustness checks and extends the critique in Barker (2023). Kiley’s results remain spurious, resulting from a combination of outlier observations, heteroskedasticity, and correlations of time with both GDP growth and temperature. Autocorrelation of growth and temperature exacerbate the spuriousness of his findings. Simulated data illustrate how Kiley’s estimation method produces spurious results.