Uncertainty, Tradeoffs, and Credible Climate Policy
Charles Manski (Northwestern University) discusses how credible climate policy requires honestly confronting deep uncertainty, about climate models, economic damages, and discount rates, rather than becoming entrenched in opposing ideologies. Welfare economics provides the rigorous framework needed to transparently quantify the tradeoffs between abatement costs and climate damages.
Sovereign Debt Sustainability, Carbon Budgets, and Climate Damages
Caterina Seghini (Banque de France) examines how mitigation costs and climate damages affect the debt limits of advanced economies
Greenflation and implications for monetary policy
The recent experience with surging inflation, partly driven by supply shocks to the energy sector, has ampiflied concerns over “greenflation,” inflationary pressures resulting from the transition to sustainable energy sources. For this digest Conny Olovsson (ECB and Sveriges Riksbank) and David Vestin (Sveriges Riksbank) have curated the most recent literature on the theoretical and empirical findings on how greenflation arises and what central banks can do to curb it. They, and the papers they have chosen, highlight the central role for foresighted monetary policy as well as a smooth carbon taxation path.
Biodiversity-adjusted sovereign credit ratings
Patrycja Klusak (Norwich Business School), highlights recent research that aims to adjust sovereign credit scores for the impact of biodiversity risks.
Likely emissions pathways in the 21st century
Frances Moore (UC Davis) has selected recent research that attempts to estimate the likelihood of different greenhouse gas emission pathways. Such estimates must take the socio-political-technical processes that influence emission pathways into account.
Heterogeneous expectations and climate change
Francesca Diluiso (Bank of England) has selected some recent research on how to incorporate heterogeneous expectations in models that evaluate effects of climate policies on the macroeconomy.
Modelling uncertainty in climate economics
Loïc Berger (Researcher at the CNRS and Professor of Economics at IÉSEG School of Management) highlights research on incorporating uncertainty in analytical models for the purpose of making quantitative assessments of alternative policies.