Abstract
AbstractClimate change and economic growth are closely connected. Climate change has the potential to reduce economic growth in developing countries due to their limited ability to respond to the negative impacts of a changing climate. A better understanding of weather variability can enhance climate change policies, which would help to support economic growth in these countries. As such, this research sought to examine if there is a long-run relationship between sectoral output and weather variables (temperature and rainfall) and to analyze the effect of weather variability on sectoral output using a panel of 13 sectors in Kenya.A Pedroni cointegration test was carried out to find out if there exists a long-run relationship among the variables and thereafter, a fully modified ordinary least squares regression was conducted to establish the effect of weather variability on sectoral output. The results indicate that there is a long-run relationship between temperature and sectoral output. Moreover, temperature has a larger effect on sectoral output compared to rainfall. With the evidence gathered from this research, it can be concluded that weather variability has an economic effect on sectoral output in Kenya. Given this, the Kenyan government needs to take a keen interest in understanding the effect of weather variability on the economy and in the broader picture, take steps to mitigate climate change.
Highlights
A fully modified ordinary least squares (FMOLS) procedure was adopted to estimate the effect of weather variability on sectoral output
The business regulatory environment as measured by the Country Policy and Institutional Assessment (CPIA) has a positive relationship with sectoral output where a 1% increase in the country policy and institutional assessment (CPIA) rating would result in an increase of sectoral output by 0.75% holding all other factors constant
The results from this chapter indicate the presence of a long-run relationship between sectoral output in Kenya and temperature
Summary
Weather refers to the temporary conditions of the atmosphere, which is the layer of air that surrounds the earth. There are various factors that can change the atmosphere such as temperature, air pressure, humidity, wind speed, wind direction, altitude, and topography, among others. Together, these factors determine the weather in a certain area (National Centers for Environmental Information 2018). There is a cry for environmental conservation since extreme weather occurrences have been found to be directly linked to the environment’s state. Mortimore et al (2009) provide insight on the pattern that developing countries have recorded in terms of extreme weather occurrences. The authors find that there has not been much investment and development to aid in preventing the damages that come with extreme weather occurrences in these countries. The labor force and industries are affected due to extreme
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