Cold shocks supress output and demand, while heatwaves do not, a new study reveals.

In his paper, published on July 31, Bank of Italy economist Filippo Natoli uses a local projections model to estimate the macroeconomic impact of weather volatility. He finds that cold shocks significantly decrease industrial production and push down the consumer price index, which compels central banks to loosen monetary policy.

This, he argues, would be partly due to consumption patterns. Cold shocks cut spending