The risks from climate change to sovereign debt.

ABSTRACT: The exposure of sovereigns to climate risks is priced and can affect credit ratings and debt servicing costs. I argue that the climate risks to fiscal stability are not receiving adequate attention and discuss how to remedy the situation. After providing evidence of divergent climate risks to advanced economies, I describe the transmission channels from climate change to public finance. Then, I suggest how integrated assessment models (IAMs) can be linked with stochastic debt sustainability analysis (DSA) to inform our understanding of climate risks to sovereign debt dynamics and assess the available fiscal space to finance climate policies. I argue for adopting the narrative scenario architecture developed within the IPCC to bring structure and transparency to the analysis. The analysis i

SUBMITTER: Zenios SA 

PROVIDER: S-EPMC9174924 | biostudies-literature | 2022

REPOSITORIES: biostudies-literature