Although the existing empirical literature, in the Indian context, has attempted to estimate the appropriate weather damage specification to capture the impact of damages due to weather shocks, these studies, however, do not shed any light on the impact of the interplay of temperature and precipitation variables on economic growth. [...] Our approach calculates the marginal effect of weather on the economic growth while adapting for regional weather features, drawing on the research on the effects of temperature and precipitation on the economic growth. [...] In contrast to them, Hypothesis 1 highlights the possibility of dependency of the impact of a temperature change (on the per capita economic growth) with the precipitation level. [...] Consequently, we calculate the following Bayes factor10 (BF) and contrast the BIC of alternative models [BIC(H1)] with the null model, which in this case is the specification with the lowest BIC [BIC(H0)]: BF ≈ e[BIC(H1)−BIC(H0)]/2 (9) The odds favouring the null model against the alternative model are obtained from the ensuing estimate of the Bayes factor. [...] 24 indicates the complexity of association of weather variables with the per capita economic growth; it offers no insight into the direction or strength of the influence of their effect on the per capita economic growth.
- Pages
- 59
- Published in
- India
Table of Contents
- Insert from: "Manuscript.pdf" 3
- Introduction 4
- Related literature 6
- Weather effects on Indian economy 6
- Temperature impact 6
- Precipitation impact 7
- Choice of the weather variables 8
- Estimation specification 8
- A generalized conceptual framework 9
- Theoretical Framework 9
- Comparison with previous literature 11
- Generalization over the previous literature 11
- A different decomposition 12
- Data and preliminary results 12
- Data 12
- Preliminary analysis 13
- Formulation of the hypotheses 14
- Empirical methodology 17
- The Overall Methodology 17
- Hypothesis Testing 17
- Estimation of damage function 18
- Hypothesis testing 18
- Varying Coefficient Models: 19
- Panel Unit root test 20
- Model selection for VC-GAM 20
- Estimation of damage function 22
- Damage specifications considered: 22
- Model selection procedure 23
- Results 25
- Hypothesis testing: 25
- Selection of the optimal VC-GAM 25
- Hypothesis testing using the optimal VC-GAM 27
- Estimation of damage function 30
- Selection of the optimal damage specification 30
- Estimates of damage specification 34
- Robustness exercises and additional analysis 36
- Robustness checks 36
- Heterogeneity across state and years 39
- Medium- and long-run effects 43
- Discussion and conclusion 45
- Theoretical framework for weather effect on Labour productivity level 54
- Summary statistics 55
- Post-diagnostics test for error distribution 56
- Robustness checks 58
