Three green financial policies to address climate risks
| Autor: | Valentina Bosetti, Francesco Lamperti, Massimo Tavoni, Tania Treibich, Andrea Roventini |
|---|---|
| Přispěvatelé: | Macro, International & Labour Economics, RS: GSBE Theme Data-Driven Decision-Making, Observatoire français des conjonctures économiques (Sciences Po) (OFCE), Sciences Po (Sciences Po), European Project: 822781,H2020,H2020-SC6-TRANSFORMATIONS-2018-2019-2020,GROWINPRO(2019) |
| Jazyk: | angličtina |
| Rok vydání: | 2021 |
| Předmět: |
DYNAMICS
OUTPUT GROWTH CLIMATE CHANGE and the Supply of Money and Credit: General Financial fragility EMPIRICAL VALIDATION MACROPRUDENTIAL POLICY 7. Clean energy Monetary Policy Environmental Economics: General 11. Sustainability Business cycle media_common MACROECONOMICS 050208 finance FOSSIL-FUEL 05 social sciences 1. No poverty JEL: Q - Agricultural and Natural Resource Economics • Environmental and Ecological Economics/Q.Q5 - Environmental Economics/Q.Q5.Q50 - General Computational Techniques Simulation Modeling 04 agricultural and veterinary sciences [SHS.ECO]Humanities and Social Sciences/Economics and Finance JEL: O - Economic Development Innovation Technological Change and Growth/O.O4 - Economic Growth and Aggregate Productivity/O.O4.O44 - Environment and Growth FINANCIAL STABILITY 8. Economic growth General Economics Econometrics and Finance AGENT-BASED MODEL media_common.quotation_subject Climate change GRANGER CAUSALITY JEL: E - Macroeconomics and Monetary Economics/E.E5 - Monetary Policy Central Banking and the Supply of Money and Credit/E.E5.E50 - General JEL: C - Mathematical and Quantitative Methods/C.C6 - Mathematical Methods • Programming Models • Mathematical and Simulation Modeling/C.C6.C63 - Computational Techniques • Simulation Modeling Credit rating BUSINESS CYCLES Effects of global warming CLIMATE CHANGE ENDOGENOUS GROWTH FINANCIAL STABILITY MACROPRUDENTIAL POLICY AGENT-BASED MODEL Debt 0502 economics and business Capital requirement FISCAL-POLICIES e50 - Monetary Policy 040101 forestry Finance business.industry CUMULATIVE CARBON Central Banking e50 - Monetary Policy Central Banking and the Supply of Money and Credit: General ENDOGENOUS GROWTH Environment and Growth o44 - Environment and Growth MODEL Climate change mitigation 13. Climate action 0401 agriculture forestry and fisheries q50 - Environmental Economics: General Business |
| Zdroj: | Journal of Financial Stability, 54:100875. Elsevier Journal of Financial Stability Journal of Financial Stability, 2021, 54, ⟨10.1016/j.jfs.2021.100875⟩ |
| ISSN: | 1572-3089 |
| Popis: | International audience; Which policies can increase the resilience of the financial system to climate risks? Recent evidence on the significant impacts of climate change and natural disasters on firms, banks and other financial institutions call for a prompt policy response. In this paper, we employ a macro-financial agent-based model to study the interaction between climate change, credit and economic dynamics and test a mix of policy interventions. We first show that financial constraints exacerbate the impact of climate shocks on the economy while, at the same time, climate damages to firms make the banking sector more prone to crises. We find that credit provision can both increase firms' productivity and their financial fragility, with such a trade-off being exacerbated by the effects of climate change. We then test a set of "green" finance policies addressing these risks, while fostering climate change mitigation: i) green Basel-type capital requirements, ii) green public guarantees to credit, and iii) carbon-risk adjustment in credit ratings. All the policies reduce carbon emissions and the resulting climate impacts, though moderately. However, their effects on financial and real dynamics is not straightforwardly positive. Some combinations of policies fuel credit booms, exacerbating financial instability and increasing public debt. We show that the combination of the three policies leads to a virtuous cycle of (mild) emission reductions, stable financial sector and high economic growth. Additional tools would be needed to fully adapt to climate change. Hence, our results point to the need to complement financial policies cooling down climate-related risks with mitigation policies curbing emissions from real economic activities. |
| Databáze: | OpenAIRE |
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