Sampreet Singh Goraya on Climate change, firms and aggregate productivity

Sampreet Singh Goraya presents at the WIDER Seminar Series on 05 February 2025.

Climate change, firms and aggregate productivity 

Abstract

This paper uses a general equilibrium framework to examine the effects of temperature on firm-level demand, productivity, and input allocation efficiency, deriving an aggregate damage function for climate change. Using data from Italian firms and detailed climate data, it uncovers a sizable negative effect of extreme temperatures on firm-level productivity and revenue-based marginal product of capital. 

Based on these estimates, the model generates aggregate productivity losses from local temperature fluctuations that are higher than previously thought, ranging from 0.60 to 6.82 percent depending on the scenario and the extent of adaptation. Notably, these losses are approximately four times greater than those estimated by averaging firm-level losses in a representative firm model, which does not capture frictions that alter allocative efficiency in a heterogeneous firm setting. Therefore, incorporating our framework into Integrated Assessment Models is likely to revise upwards the estimated economic costs of climate change.

About the presenter

Sampreet Singh Goraya is an assistant professor of economics at Stockholm School of Economics and EUDN associate. He studies macroeconomics. He works on topics related to Growth & Development, focusing on firm dynamics, resource allocation and productivity.

WIDER Seminar Series

The WIDER Seminar Series showcases the latest research on key topics in development economics. It provides a forum for senior and early-career researchers, both in-house and external, to present recent and ongoing work related to UNU-WIDER’s current work programme.

In addition to providing a forum for both academic debate and training, the series presents an opportunity for policymakers and others interested in development to learn about the latest research methods and findings.

The WIDER Seminar Series events take place on Wednesdays. All those interested are invited to register and attend via Zoom or in person.