Temperature and economic activity: evidence from India

Abstract

This paper investigates the impact of temperature on economic activity in India, using state-level data from 1980–2015. We estimate that a 1∘C increase in contemporaneous temperature (relative to our sample mean) reduces the economic growth rate that year by 2.5 percentage points. The adverse impact of higher temperatures is more severe in poorer states and in the primary sector. Our analysis of lagged temperatures suggests that our effects are driven by the contemporaneous effect of temperature on output; we do not find evidence of a permanent impact of contemporaneous temperatures on future growth rates.

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