Three green financial policies to address climate risks
نویسندگان
چکیده
• Climate risks affect both the real economy and financial system. We employ an agent-based macro-financial model to assess green policies. Green capital requirements spur productivity without hampering stability. Carbon risk adjustment public guarantees mitigate emissions but increase instability. A policy mix comprising all three policies is a sufficient condition for virtuous cycle. Which can resilience of system climate risks? Recent evidence on significant impacts change natural disasters firms, banks other institutions call prompt response. In this paper, we study interaction between change, credit economic dynamics test interventions. first show that constraints exacerbate impact shocks while, at same time, damages firms make banking sector more prone crises. find provision firms’ their fragility, with such trade-off being exacerbated by effects change. then set “green” finance addressing these risks, while fostering mitigation: i) Basel-type requirements, ii) credit, iii) carbon-risk in ratings. All reduce carbon resulting impacts, though moderately. However, not straightforwardly positive. Some combinations fuel booms, exacerbating instability increasing debt. combination leads cycle (mild) emission reductions, stable high growth. Additional tools would be needed fully adapt Hence, our results point need complement cooling down climate-related mitigation curbing from activities.
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ژورنال
عنوان ژورنال: Journal of Financial Stability
سال: 2021
ISSN: ['1572-3089', '1878-0962']
DOI: https://doi.org/10.1016/j.jfs.2021.100875