ABSTRACT

Climate change is unequivocal and its vagaries in terms of economic impacts and costs of mitigating carbon emissions have made it an issue of central concern. The impacts of climate change and carbon emissions mitigation policy can be observed in terms of the productivity of factors of production. Though the link between temperature and productivity is talked about in the classic writings of Montesquieu (1750). Marshall (1890) and Huntington (1915), it is less discussed in the literature on the impacts of climate change (Dell et al., 2008). The objective of the present study is to measure a relationship between cumulative total factor productivity (TFP) and average temperature over the last three decades for 88 countries over a span of 15 years (1994-2008) and the role of institutions in lowering the climate change impacts on TFP.