Boromeus Wanengkirtyo, Francesca Diluiso, Rebecca Mari, Jenny Chan, Ambrogio Cesa-Bianchi and Alex Haberis.
Local weather change is changing into more and more vital for financial coverage because the world transitions into greener economies and local weather change’s bodily impacts grow to be extra outstanding. That is complementary, however distinct to, inspecting how local weather change impacts monetary stability dangers (Carney (2015)). This collection of posts highlights how local weather change can have an effect on key financial variables corresponding to output and inflation, and thereby the conduct of financial coverage. Local weather change and local weather insurance policies symbolize one other set of financial shocks and structural modifications to watch, in order that financial coverage can meet its aims.
Local weather change additionally presents some distinct challenges for financial coverage. These embody its heterogeneous affect throughout international locations, the unpredictability of bodily dangers, in addition to the uncertainties in regards to the implementation of local weather coverage, its results, and the way financial brokers will reply to them. Reflecting this, the current literature on local weather change and financial coverage has grown quickly. This collection goals to contribute to the talk with a number of approaches: using a theoretical enterprise cycle mannequin to evaluate how completely different local weather insurance policies form the response to ‘standard’ macroeconomic shocks, inspecting the financial results of local weather insurance policies throughout international locations utilizing high-frequency local weather coverage shocks, and mixing granular geospatial and firm-level information.
The first submit of this collection focuses on some key features of local weather mitigation insurance policies that might matter for the conduct of financial coverage. The second submit highlights cross-country variations: whereas impacts from present local weather insurance policies could seem minor, their results are heterogeneous throughout international locations and companies. The third and fourth posts look at the bodily impacts of local weather change, with a give attention to flooding, a key bodily danger of local weather change within the UK. The financial affect of flooding is analysed at each the agency and combination degree, along with how sorting and adaptation funding form companies’ publicity to flood dangers.
Boromeus Wanengkirtyo, Francesca Diluiso and Rebecca Mari work within the Financial institution’s Structural Economics Division. Jenny Chan works within the Financial institution’s Exterior MPC Unit. Ambrogio Cesa-Bianchi and Alex Haberis work within the Financial institution’s International Evaluation Division.
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