Glenn Rudebusch

“The Rising Cost of Climate Change: Evidence from the Bond Market”

Event description

Glenn Rudebusch presented the paper “The Rising Cost of Climate Change: Evidence from the Bond Market” he co-authored with Michael D. Bauer. From the abstract:

Social discount rates (SDRs) are crucial for evaluating the costs of climate change. We show that the fundamental anchor for market-based SDRs is the equilibrium or steady-state real interest rate. Empirical interest rate models that allow for shifts in this equilibrium real rate find that it has declined notably since the 1990s, and this decline implies that the entire term structure of SDRs has shifted lower as well. Accounting for this new normal of persistently lower interest rates substantially boosts estimates of the social cost of carbon and supports a climate policy with stronger carbon mitigation strategies.


Pierre Monnin
Senior Fellow, CEP

Glenn Rudebusch

Glenn Rudebusch is Executive Vice President at the Federal Reserve Bank of San Francisco. He holds a Ph.D. in Economics from the University of Pennsylvania.

Paper and slides

“The Rising Cost of Climate Change: Evidence from the Bond Market” (paper)



Related Webinars

December 12, 2022
Fernanda Nechio
Fernanda Nechio, Glenn Rudebusch, Patrick Bolton, Pierre Monnin
Vice President, Sustainable Growth Research
Federal Reserve Bank of San Francisco
Glenn Rudebusch
Nonresident Senior Fellow
Brookings Institution
Patrick Bolton
Research Director and Professor of Finance & Economics
Centre for Climate Finance & Investment, Imperial College London
Pierre Monnin
Senior Fellow
Council on Economic Policies
November 21, 2022
Alessandro Notarpietro
Head of the Models for Policy Analysis Unit, Modelling and Forecasting Division
Bank of Italy
November 7, 2022
Alissa M. Kleinnijenhuis
Research Scholar
The Stanford Institute for Economic Policy Research (SIEPR), Stanford University

Donate Now