Economic Growth in the Caribbean: How Much is Driven by Climate Change?

What is the relationship between economic growth and climate change? Over the course of this project, I sought to contribute to the literature on economic growth by quantifying the impact of climate change on growth in the Caribbean. I use data from the World Bank, CEPII, and the EM-DAT database to measure the effects of climate change on economic growth. I suggest a causal link between the effects of climate change that are studied here, namely temperature and economic growth. Specifically I find that on average, every one degree Celsius increase in a country’s average temperature decreases GDP per capita growth by about 2.6 percentage points, all else equal. Also, I find no significant causal relationship between natural disaster effects and economic growth in the region once accounting for the effect of temperatures.