Boromeus Wanengkirtyo, Francesca Diluiso, Rebecca Mari, Jenny Chan, Ambrogio Cesa-Bianchi and Alex Haberis.
Local weather change is turning into more and more vital for financial coverage because the world transitions into greener economies and local weather change’s bodily impacts develop into extra outstanding. That is complementary, however distinct to, analyzing 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 resembling output and inflation, and thereby the conduct of financial coverage. Local weather change and local weather insurance policies signify one other set of financial shocks and structural modifications to watch, in order that financial coverage can meet its targets.
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 concerning the implementation of local weather coverage, its results, and the way financial brokers will reply to them. Reflecting this, the latest literature on local weather change and financial coverage has grown quickly. This collection goals to contribute to the controversy with a number of approaches: using a theoretical enterprise cycle mannequin to evaluate how totally different local weather insurance policies form the response to ‘standard’ macroeconomic shocks, analyzing 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 publish of this collection focuses on some key elements of local weather mitigation insurance policies that would matter for the conduct of financial coverage. The second publish highlights cross-country variations: whereas impacts from present local weather insurance policies might seem minor, their results are heterogeneous throughout international locations and companies. The third publish and fourth publish look at the bodily impacts of local weather change, with a concentrate on flooding, a key bodily threat of local weather change within the UK. The financial affect of flooding is analysed at each the agency and mixture 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 World Evaluation Division.
If you wish to get in contact, please e-mail us at bankunderground@bankofengland.co.uk or depart a remark under.
Feedback will solely seem as soon as authorised by a moderator, and are solely printed the place a full title is equipped. Financial institution Underground is a weblog for Financial institution of England employees to share views that problem – or help – prevailing coverage orthodoxies. The views expressed listed below are these of the authors, and will not be essentially these of the Financial institution of England, or its coverage committees.
Share the publish “Local weather and financial coverage collection”