Evolving Temperature Dynamics in Canada: Preliminary Evidence Based on 60 Years of Data
Climate change is fast becoming an important consideration in finance and economics. Political leaders, heads of treasuries and central banks, and chief executive officers of large private banks have recently spoken out on the importance of climate change for future economic and financial developments.
In this paper, we attempt to improve our understanding of one aspect of the climate change question by examining the evolution of temperatures across Canada from 1960 to 2020. While rising mean temperature levels in Canada and elsewhere have been well documented, we explore other dimensions of temperature dynamics using modern econometric methods and rich model specifications.
Our results suggest that daily temperature volatility and seasonality have been changing over time and that these changes are statistically meaningful. Moreover, we provide evidence that the duration of extreme temperature events has been increasing over the sample period. This new evidence gives economists and policy-makers who are exploring issues related to climate change a better understanding of Canadian temperature dynamics and their magnitudes.