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Macrofinancial Risks of the Transition to a Low-Carbon Economy

Author

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  • Emanuele Campiglio
  • Frederick van der Ploeg

Abstract

A disorderly transition to a low-carbon economy may pose significant costs for both financial and nonfinancial firms through the stranding of physical assets, firms’ defaults, and volatility in asset prices. The spread of these disruptions through production and financial networks may exacerbate transition costs. Green financial and monetary policies may help to mitigate the cost of transitioning to a low-carbon future, but coordination among public institutions (governments, central banks, and financial supervisors) is needed. We discuss qualitative, empirical, modeling, policy, and institutional research on this topic and identify priorities for future research.

Suggested Citation

  • Emanuele Campiglio & Frederick van der Ploeg, 2022. "Macrofinancial Risks of the Transition to a Low-Carbon Economy," Review of Environmental Economics and Policy, University of Chicago Press, vol. 16(2), pages 173-195.
    • Handle: RePEc:ucp:renvpo:doi:10.1086/721016
    DOI: 10.1086/721016
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    Cited by:

    1. Cahen-Fourot, Louison & Campiglio, Emanuele & Daumas, Louis & Miess, Michael Gregor & Yardley, Andrew, 2023. "Stranding ahoy? Heterogeneous transition beliefs and capital investment choices," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 535-567.
    2. Achim Hagen & Gilbert Kollenbach, 2024. "The Political Economy of Stranded Assets: Climate Policies, Investments and the Role of Elections," Berlin School of Economics Discussion Papers 0033, Berlin School of Economics.
    3. Bogmans, Christian & Pescatori, Andrea & Prifti, Ervin, 2024. "The impact of climate policy on oil and gas investment: Evidence from firm-level data," European Economic Review, Elsevier, vol. 165(C).

    More about this item

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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