Title page 1

Contents 1

Abstract 2

Non-technical summary 3

1. Introduction 5

2. Data 10

3. Methodology 16

4. Results 18

4.1. The impact of extreme weather events on overall economic activity 18

4.2. The impact of extreme weather events across sectors 22

4.3. Summary of results 27

5. Robustness checks 29

5.1. Extreme weather events as exogenous variables 29

5.2. Alternative thresholds for extreme weather events 30

6. Conclusions 30

References 32

Appendix A. Climate data 35

Appendix B. Conditional distributions 37

Appendix C. Impulse response functions of sectoral output to the extreme weather event shocks 40

Appendix D. Impulse response functions in robustness exercises 48

Acknowledgements 54

Figures 12

Figure 1. Distribution of extreme weather events across months (number of days) 12

Figure 2. Extremely high temperature (number of days) 13

Figure 3. Extremely low temperature (number of days) 14

Figure 4. Extremely high precipitation (number of days) 15

Figure 5. Extremely low precipitation (number of days) 16

Figure 6. Impact of extremely high (left panels) and low (right panels) temperature on the level of real GDP (upper panels) and HICP (lower panels) 19

Figure 7. Impact of extremely high (left panels) and low (right panels) precipitation on the level of real GDP (upper panels) and HICP (lower panels) 20

Figure 8. Impact of extremely high (left panel) and low (right panel) temperature on the level of real GDP and sectoral activity 22

Figure 9. Impact of extremely high (left panel) and low (right panel) precipitation on the level of real GDP and sectoral activity 25

Figure 10. Summary table 27

Appendix Tables 37

Table A.1. Sector classification 37

Appendix Figures 38

Figure B.1. Conditional distribution of extremely high temperature (number of months, excluding months with no extreme weather events) 38

Figure B.2. Conditional distribution of extremely low temperature (number of months, excluding months with no extreme weather events) 38

Figure B.3. Conditional distribution of extremely high precipitation (number of months, excluding months with no extreme weather events) 39

Figure B.4. Conditional distribution of extremely low precipitation (number of months, excluding months with no extreme weather events) 39

Figure C.1. Impact of extremely high temperature on real GDP and sectoral activity in Germany 40

Figure C.2. Impact of extremely high temperature on real GDP and sectoral activity in France 40

Figure C.3. Impact of extremely high temperature on real GDP and sectoral activity in Italy 41

Figure C.4. Impact of extremely high temperature on real GDP and sectoral activity in Spain 41

Figure C.5. Impact of extremely low temperature on real GDP and sectoral activity in Germany 42

Figure C.6. Impact of extremely low temperature on real GDP and sectoral activity in France 42

Figure C.7. Impact of extremely low temperature on real GDP and sectoral activity in Italy 43

Figure C.8. Impact of extremely low temperature on real GDP and sectoral activity in Spain 43

Figure C.9. Impact of extremely high precipitation on real GDP and sectoral activity in Germany 44

Figure C.10. Impact of extremely high precipitation on real GDP and sectoral activity in France 44

Figure C.11. Impact of extremely high precipitation on real GDP and sectoral activity in Italy 45

Figure C.12. Impact of extremely high precipitation on real GDP and sectoral activity in Spain 45

Figure C.13. Impact of extremely low precipitation on real GDP and sectoral activity in Germany 46

Figure C.14. Impact of extremely low precipitation on real GDP and sectoral activity in France 46

Figure C.15. Impact of extremely low precipitation on real GDP and sectoral activity in Italy 47

Figure C.16. Impact of extremely low precipitation on real GDP and sectoral activity in Spain 47

Figure D.1. Impact of extremely high (left panels) and low (right panels) temperature on the level of real GDP (upper panels) and HICP... 48

Figure D.2. Impact of extremely high (left panels) and low (right panels) precipitation on the level of real GDP (upper panels) and HICP... 49

Figure D.3. Impact of extremely high (left panels) and low (right panels) temperature on the level of real GDP (upper panels) and HICP... 50

Figure D.4. Impact of extremely high (left panels) and low (right panels) precipitation on the level of real GDP (upper panels) and HICP... 51

Figure D.5. Impact of extremely high (left panels) and low (right panels) temperature on the level of real GDP (upper panels) and HICP... 52

Figure D.6. Impact of extremely high (left panels) and low (right panels) precipitation on the level of real GDP (upper panels) and HICP... 53