Policy Briefs

Illuminating Current Debates on Climate through Academic Insight: The Policy Brief Series

Drafted by economists who have shared their latest research in our Young Scholars’ webinar series, the Policy Briefs analyze key debates related to addressing climate change. The authors apply their expertise to elucidate the intricacies of reducing greenhouse gas emissions (“mitigation”) and adapting to current and expected climate impacts. By contextualizing recent scientific findings within policy conversations, the series illuminates evidence-based pathways for climate action. Both timely and thoughtful, the Policy Briefs aim to elevate discussions beyond rhetoric to the substantive domain of academic research.

Mayank Kumar (University of Michigan) argues in his paper "Getting Dirty Before You Get Clean: Institutional Investment in Fossil Fuels and the Green Transition" argues that private investment in fossil fuel companies does not adversely affect climate outcomes but rather it can support the green transition by financing clean technologies. Specifically, the paper studies the effects of PE investment in fossil fuel on solar energy technologies.

Charles A. Taylor (Harvard Business School) and Marco Tabellini (Harvard Business School) introduce the concept of “climate matching” as a driver of migration and establish several new results. They show that climate strongly predicts the spatial distribution of immigrants in the US, as movers select destinations with climates similar to their place of origin.

Adelina Barbalau (University of Alberta) shows how carbon-contingent securities can provide carbon reduction incentives that are equivalent to a carbon tax, and can thus offer a decentralized alternative to regulation which is not subject to political constraints.

In this brief, we ask whether the implementation of national climate policies may spur a global race to protectionism. Consumer or production subsidies and border carbon adjustments may have positive mitigation effects but can also generate trade distortions and give national industries a competitive advantage against foreign firms.

Climate stress tests were built to assess climate systemic risk in the financial system. They demand resources from supervisors and banks alike, but are proving useful to inform macroprudential policies.

Climate change has a destabilizing effect on financial markets. If market actors become overexposed to climate-sensitive assets, the ensuing market failure provides justification for central bank intervention to prevent cascading financial effects.

To secure price stability and fulfill their primary mandate, policymakers should act promptly: interest rate management, expectation anchoring, financial stabilization, cooperation with fiscal authorities are just some of the tools at their disposal.

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