Coping With Collapse: A Stock-Flow Consistent Monetary Macrodynamics of Global Warming

Bovari, Emmanuel; Giraud, Gaël; Isaac, Florent Mc

doi:10.1016/j.ecolecon.2018.01.034

Cited by 99 publications

(70 citation statements)

References 28 publications

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“…A possible explanation for this neglect is related to the models traditionally used by central banks, which "are not well suited to capturing the effects of climate change or the complexity of the economic transition" (Sevillano and Gonzalez, 2018, p.129). Indeed, only recently a new generation of models has been developed to account for the effects of climate change on financial and economic stability (Balint et al, 2017;Fontana and Sawyer, 2016;Dafermos et al, 2017Dafermos et al, , 2018Monasterolo and Raberto, 2018;Bovari et al, 2018;Lamperti et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

“…Despite the rising awareness of the adverse impact of climate-related risk on financial stability (Carney, 2015;HLEG, 2018;DNB, 2017), there are no internationally agreedupon regulatory schemes to withstand the potential losses they can cause to the financial sector. To tackle climate-related financial issues, the attention of researchers has been so far devoted mainly to the possible effects of the transition process on the financial sector (Carney, 2015;Covington and Thamotheram, 2015;Campiglio et al, 2017;Bovari et al, 2018) and market-based measures have been proposed to solve the issue (Stiglitz et al, 2017). However, carbon taxes, as well as policies based on subsidies, seem to reflect a lack of awareness of the financial risks related to climate change (World Bank, 2014Campiglio, 2016), such as the loss of value of financial assets (Dietz et al, 2016), or the issue of stranded assets (Caldecott, 2017;Delis et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies?

D’Orazio¹,

Popoyan

2019

Ecological Economics

218

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. AbstractWhile there is a growing debate among researchers and practitioners on the possible role of central banks and financial regulators in supporting a smooth transition to a low-carbon economy, the information on which macroprudential instruments could be used for reaching the "green structural change" is still quite limited. Moreover, the achievement of climate goals is still affected by the so-called "green finance gap". The paper addresses these issues by proposing a critical review of existing and novel prudential approaches to incentivizing the decarbonization of banks' balance sheets and align finance with sustainable growth and development objectives. The analysis carried out in the paper allows understanding under which conditions macroprudential policy could tackle climate change and promote green lending, while containing climate-related financial risks. JEL Classification: E50, E52, G28, Q50, Q58

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies?

D’Orazio¹,

Popoyan

2019

Ecological Economics

218

View full text Add to dashboard Cite

show abstract

“…Models that focus on money and finance follow this theoretical underpinning (e.g. Bovari, Giraud, & Mc Isaac, 2018;Dafermos, Nikolaidi, & Galanis, 2017;Lamperti, Dosi, Napoletano, Roventini, & Sapio, 2018;Mercure, Pollitt, Edwards, Holden, & Vinuales, 2018a;Monasterolo & Raberto, 2018).…”

Section: Technology and Innovation In Economic Theorymentioning

confidence: 99%

Modelling innovation and the macroeconomics of low-carbon transitions: theory, perspectives and practical use

et al. 2019

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Energy and climate policies may have significant economy-wide impacts, which are regularly assessed based on quantitative energy-environment-economy models. These tend to vary in their conclusions on the scale and direction of the likely macroeconomic impacts of a low-carbon transition. This paper traces the characteristic discrepancies in models' outcomes to their origins in different macroeconomic theories, most importantly their treatment of technological innovation and finance. We comprehensively analyse the relevant branches of macroinnovation theory and group them into two classes: 'Equilibrium' and 'Nonequilibrium'. While both approaches are rigorous and self-consistent, they frequently yield opposite conclusions for the economic impacts of low-carbon policies. We show that model outcomes are mainly determined by their representations of monetary and finance dimensions, and their interactions with investment, innovation and technological change. Improving these in all modelling approaches is crucial for strengthening the evidence base for policy making and gaining a more consistent picture of the macroeconomic impacts of achieving emissions reductions objectives. The paper contributes towards the ongoing effort of enhancing the transparency and understanding of sophisticated model mechanisms applied to energy and climate policy analysis. It helps tackle the overall 'black box' critique, much-cited in policy circles and elsewhere.Key policy insights . Quantitative models commissioned by policy-makers to assess the macroeconomic impacts of climate policy generate contradictory outcomes and interpretations. . The source of the differences in model outcomes originates primarily from assumptions on the workings of the financial sector and the nature of money, and of how these interact with processes of low-carbon energy innovation and technological change. . Representations of innovation and technological change are incomplete in energyeconomy-environment models, leading to limitations in the assessment of the impacts of climate-related policies. . All modelling studies should state clearly their underpinning theoretical school and their treatment of finance and innovation. . A strong recommendation is given for modellers of energy-economy systems to improve their representations of money and finance. ARTICLE HISTORY

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“…Despite the rising awareness of the adverse impact of climate-related risk on financial stability (Carney, 2015;HLEG, 2018;DNB, 2017), there are no internationally agreedupon regulatory schemes to withstand the potential losses they can cause to the financial sector. To tackle climate-related financial issues, the attention of researchers has been so far devoted mainly to the possible effects of the transition process on the financial sector (Carney, 2015;Covington and Thamotheram, 2015;Campiglio et al, 2017;Bovari et al, 2018) and market-based measures have been proposed to solve the issue (Stiglitz et al, 2017). However, carbon taxes, as well as policies based on subsidies, seem to reflect a lack of awareness of the financial risks related to climate change (World Bank, 2014Bank, , 2016Campiglio, 2016), such as the loss of value of financial assets (Dietz et al, 2016), or the issue of stranded assets (Caldecott, 2017;Delis et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

Fostering Green Investments and Tackling Climate-Related Financial Risks: Which Role for Macroprudential Policies?

D’Orazio

Popoyan

2018

SSRN Journal

View full text Add to dashboard Cite

While there is a growing debate among researchers and practitioners on the possible role of central banks and financial regulators in supporting a smooth transition to a low-carbon economy, the information on which macroprudential instruments could be used for reaching the "green structural change" is still quite limited. Moreover, the achievement of climate goals is still affected by the so-called "green finance gap". The paper addresses these issues by proposing a critical review of existing and novel prudential approaches to incentivizing the decarbonization of banks' balance sheets and align finance with sustainable growth and development objectives. The analysis carried out in the paper allows understanding under which conditions macroprudential policy could tackle climate change and promote green lending, while containing climate-related financial risks.

show abstract

Coping With Collapse: A Stock-Flow Consistent Monetary Macrodynamics of Global Warming

Cited by 99 publications

References 28 publications

Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies?

Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies?

Modelling innovation and the macroeconomics of low-carbon transitions: theory, perspectives and practical use

Fostering Green Investments and Tackling Climate-Related Financial Risks: Which Role for Macroprudential Policies?

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