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From Hell To Heaven: How Climate Risks Hurt The Poor And Climate Finance Heals Them

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  • Dr. Kangyin Dong

    (University of International Business and Economics, China)

  • Congyu Zhao

    (University of International Business and Economics, China)

  • Xiucheng Dong

    (University of International Business and Economics, China)

Abstract

This study explores the global impact of climate finance on wealth and income inequality, utilizing the IV-GMM model to capture nuanced relationships. Key findings indicate that climate finance effectively reduces both forms of inequality, benefiting low-income populations and suggesting it as a viable tool for inequality reduction. Notably, the impact of climate finance is asymmetric: countries with lower initial inequality levels experience more pronounced benefits, while the effect lessens as inequality increases. Additionally, climate risks—represented by natural disasters— worsen inequality, underscoring climate finance’s dual role in directly reducing inequality and indirectly mitigating disaster impacts. These insights offer valuable policy implications, highlighting climate finance as a means to promote equity and alleviate poverty in the face of escalating climate challenges.

Suggested Citation

  • Dr. Kangyin Dong & Congyu Zhao & Xiucheng Dong, 2024. "From Hell To Heaven: How Climate Risks Hurt The Poor And Climate Finance Heals Them," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 27(4), pages 603-630, December.
  • Handle: RePEc:idn:journl:v:27:y:2024:i:4b:p:603-630
    DOI: https://doi.org/10.59091/2460-9196.2414
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    More about this item

    Keywords

    Climate finance; Climate risk; Nature disaster; Income inequality; Wealth inequality;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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