The GDP-temperature relationship: implications for climate change damages
A growing literature characterizes climate change damages by relating temperature shocks to GDP. But theory does not clearly prescribe estimable forms of this relationship, yielding discretion to researchers and generating potentially considerable model uncertainty. Therefore employ model cross validation to assess the out-of-sample predictive accuracy of 401 variants of prominent models, identify the set of superior models, and characterize model uncertainty. Estimates of GDP impacts vary substantially across models, especially those assuming temperature effects on GDP growth, rather than levels. The best-performing models have non-linear temperature effects on GDP levels, and imply global GDP losses of 1-2% by 2100.