Article
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Impact of Climate Change on Inflation in 26 Selected Countries
Version 1
: Received: 31 July 2023 / Approved: 31 July 2023 / Online: 1 August 2023 (10:50:25 CEST)
A peer-reviewed article of this Preprint also exists.
Li, C.; Zhang, X.; He, J. Impact of Climate Change on Inflation in 26 Selected Countries. Sustainability 2023, 15, 13108. Li, C.; Zhang, X.; He, J. Impact of Climate Change on Inflation in 26 Selected Countries. Sustainability 2023, 15, 13108.
Abstract
In the era of persistent globalization, climate governance has emerged as a prominent concern within both the theoretical community and government departments of diverse nations. Of particular interest in academic research is the adverse effect of climate shocks on the global economy. This paper employs average temperature as a surrogate indicator for climate shocks and examines the influence of temperature fluctuations on inflation levels using a balanced panel dataset from 1995 to 2021. The findings indicate a positive association between temperature change and inflation within the country, which remains consistent even after subjecting the analysis to multiple robustness tests. Furthermore, accounting for heterogeneity reveals variations in the magnitude of response of inflation levels to temperature fluctuations. Regarding the analysis of underlying mechanisms, the study underscores the significance of energy demand as a pivotal pathway influencing inflationary pressures at the national level. Lastly, by incorporating GDP per capita as a threshold, the research reveals a nonlinear relationship between temperature change and inflation levels.
Keywords
climate shocks; temperature change; inflation; monetary policy
Subject
Business, Economics and Management, Economics
Copyright: This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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