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The distributional effects of climate change. An empirical analysis

Author

Listed:
  • Haroon Mumtaz

    (Queen Mary University)

  • Angeliki Theophilopoulou

    (Brunel University London)

Abstract

The role of climate change on output has been studied extensively in the empirical literature. However, its distributional implications have received little attention. This paper attempts to fill this gap by investigating if climate shocks affect income inequality. Using a Vector Autoregression for a large cross-country panel, we identify the climate shock in the frequency domain as the shock that explains the bulkof the variance of climate variables in the long-run. An adverse climate shock is associated with an increase in measures of income inequality, affecting mostly low income households. The impact of the shock is larger in magnitude for low income, hot countries with a significant agricultural sector and low degree of adaptation to climate change.

Suggested Citation

  • Haroon Mumtaz & Angeliki Theophilopoulou, "undated". "The distributional effects of climate change. An empirical analysis," Working Papers 966, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:966
    as

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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/2023/wp966_Dec-23.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Climate shock; income inequality; economic growth; frequency domain identification; panel VAR.;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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