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Climate change and government borrowing costs : a triple whammy for emerging market economies
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Orientador(es)
Resumo(s)
Climate change is a systemic risk to the global economy. While there is a large body of literature
documenting the potential economic consequences of climate change, there is relatively little research
on the link between vulnerabilities to climate change, the buildup of climate debt by countries with
historically large carbon dioxide emissions, and how well financial markets incorporate (or not) these
risks to sovereign governments. This paper investigates the impact of both climate debt and climate
vulnerabiities/resiliency on sovereign bond yields and spreads in advanced and emerging market
economies, using a novel dataset. We find that changes in climate debt are an important determinant
of spreads, but only in emerging market economies. Countries with high vulnerabilities and low resilency
to climate change also pay higher spreads. This implies a triple whammy of challenges for emerging
market economies as they confront the economic damages of climate change, the high fiscal costs of
climate adaptation, and high borrowing costs.
Descrição
Palavras-chave
climate change vulnerability government bond spreads sovereign risk panel data social cost of carbon
Contexto Educativo
Citação
Clements, Benedict ... [et al.] (2023). "Climate change and government borrowing costs : a triple whammy for emerging market economies". REM Working paper series, nº 0294/2023
Editora
ISEG - REM - Research in Economics and Mathematics