Estimating the Consequences of Climate Change from Variation in Weather

I formally relate the consequences of climate change to the panel variation in weather extensively explored by recent empirical literature. I show that short-run responses to weather shocks differ from long-run responses to climate change when payoffs depend on a capital or resource stock. I develop a new indirect least squares estimator that bounds long-run climate impacts from short-run responses to weather. Applying this new method, I find that an additional 2°C of global warming would eliminate profits from the average acre of current farmland in the eastern U.S.