Geography and macroeconomics: New data and new findings

The linkage between economic activity and geography is obvious: Populations cluster mainly on coasts and rarely on ice sheets. Past studies of the relationships between economic activity and geography have been hampered by limited spatial data on economic activity. The present study introduces data on global economic activity, the G-Econ database, which measures economic activity for all large countries, measured at a 1 degrees latitude by 1 degrees longitude scale. The methodologies for the study are described. Three applications of the data are investigated. First, the puzzling climate-output reversal is detected, whereby the relationship between temperature and output is negative when measured on a per capita basis and strongly positive on a per area basis. Second, the database allows better resolution of the impact of geographic attributes on African poverty, finding geography is an important source of income differences relative to high-income regions. Finally, we use the G-Econ data to provide estimates of the economic impact of greenhouse warming, with larger estimates of warming damages than past studies.