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From Skies to Markets Implications of Extreme Weather Events for Macroeconomic and Financial Imbalances in CESEE Countries

Author

Listed:
  • Meri Papavangjeli

    (Bank of Albania, Sheshi Skenderbej, Nr.1, Tirana, Albania)

Abstract

This study explores the heterogeneous and asymmetric macro-financial effects of climate change in CESEE countries, depending on the level of underlying macro-financial vulnerabilities. Focusing solely on acute physical risks - those arising from extreme weather events – it employs panel quantile regression analysis to examine data from 2000Q1-2022Q4 for 17 countries in the region. Notably, we find that climate shocks exacerbate macroeconomic and financial imbalances, increasing the susceptibility of already vulnerable economies to additional risks. Specifically, countries with higher economic imbalances suffer more severe output disruptions and heightened inflationary pressures following a climate shock. While the impact of climate shocks on external imbalances may be less pronounced, countries with existing vulnerabilities may still encounter pressures on trade and competitiveness. Additionally, climate shocks can intensify financial vulnerabilities for countries already grappling with lower levels of financial resilience.

Suggested Citation

  • Meri Papavangjeli, 2025. "From Skies to Markets Implications of Extreme Weather Events for Macroeconomic and Financial Imbalances in CESEE Countries," Working Papers IES 2025/05, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Apr 2025.
    • Handle: RePEc:fau:wpaper:wp2025_05
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    File URL: https://ies.fsv.cuni.cz/en/skies-markets-implications-extreme-weather-events-macroeconomic-and-financial-imbalances-cesee
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    More about this item

    Keywords

    extreme weather events; macro-financial vulnerabilities; CESEE countries; panel quantile regression analysis;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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