Quotation Stolbova, Veronika, Monasterolo, Irene, Battiston, Stefano. 2018. A Financial Macro-Network Approach to Climate Policy Evaluation. Ecological Economics. 149 239-253.


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Abstract

Existing approaches to assess the economic impact of climate policies tend to overlook the financial sector and to focus only on direct effects of policies on the specific institutional sector they target, neglecting possible feedbacks between sectors, thus, underestimating the overall policy effect. To fill in this gap, we develop a methodology based on financial networks, which allows for analyzing the transmission throughout the economy of positive or negative shocks induced by the introduction of specific climate policies. We apply the methodology to empirical data of the Euro Area to identify the feedback loops between the financial sector and the real economy both through direct and indirect chains of financial exposures across multiple financial instruments. By focusing on climate policy-induced shocks that affect directly either the banking sector or non-financial firms, we analyze the reinforcing feedback loops that could amplify the effects of shocks on the financial sector and then cascade on the real economy. Our analysis helps to understand the conditions for virtuous or vicious cycles to arise in the climate-finance nexus and to provide a comprehensive assessment of the economic impact of climate policies.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Ecological Economics
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, STRAT-B, VW-C, WH-B
Language English
Title A Financial Macro-Network Approach to Climate Policy Evaluation
Volume 149
Year 2018
Page from 239
Page to 253
Reviewed? Y
URL https://www.sciencedirect.com/science/article/pii/S0921800917314192
DOI https://doi.org/10.1016/j.ecolecon.2018.03.013
Open Access N

Associations

People
Monasterolo, Irene (Details)
External
Battiston, Stefano (University of Zurich, Switzerland)
Stolbova, Veronika (University of Zurich, Switzerland)
Organization
Institute for Ecological Economics IN (Details)
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