Download or read book Sectoral Impact and Propagation of Weather Shocks written by Guglielmo Zappalà and published by International Monetary Fund. This book was released on 2023-03-10 with total page 85 pages. Available in PDF, EPUB and Kindle. Book excerpt: Local weather shocks have been shown to affect local economic output, however, little is known about their propagation through production networks. Using a six-sector global dataset over the past fifty years, this paper examines the effect of weather fluctuations and extreme weather events on sectoral economic production and the transmission of weather shocks across sectors, countries and over time. I document that agriculture is the most harmed sector by heat shocks, droughts and cyclones. Using input-output interlinkages, I find that sectors at later stages of the supply chain suffer from substantial and persistent losses over time due to domestic and foreign heat shocks in other sectors. A counterfactual analysis of the average annual output loss accounting for heat shocks across trade partners shows a substantial underestimation of the economic cost of temperature increases since 2000.