Spring Meetings

Tackles climate change in Asia and the Pacific and the role of fiscal policies. We present a recently-published APD-FAD joint departmental paper “Fiscal Policies to Address Climate Change in Asia and the Pacific”. The paper addresses climate change in Asia and the Pacific, a topic of clear systemic relevance, and discusses how fiscal policies can help countries in the region to step up efforts on mitigation, adaptation, and transition to a green economy. It offers policy recommendations, taking account of country-specific economic, developmental, and political situations, as well as drawing on rigorous analysis using economic models and micro data.

• Fiscal Policies to Address Climate Change in Asia and the Pacific : Opportunities and Challenges
• Asia-Pacific, the Gigantic Domino of Climate Change

What can be the impact of climate change on the global economy? We show that large climate disasters in systemic economies can trigger spillovers and contagion across countries. Adequate domestic policies and a strong global financial safety net, with the IMF at its center, are key to containing the large economic fallout and preserving global financial stability.

The presentation addresses a new challenge for those evaluating financial stability:  how to assess risks coming from climate change? We discuss a new inter-disciplinary bank solvency stress testing approach with coherent climate change, disaster, and macroeconomic scenarios. The Philippines, one of the world’s most typhoon-prone countries, is used as an example. The approach is developed jointly by the IMF and the World Bank staff with a range of expertise from climate science, macroeconomics, and financial stability fields.

Philippines : Financial System Stability Assessment-Press Release and Statement by the Executive Director for the Philippines

Climate change is a major threat to the sustainability and inclusiveness of our societies. A just transition to a low-carbon economy is the only viable way forward. This paper reviews the science of climate change and the socio-economic damages that it causes and could cause in the remainder of this century. The paper then outlines key policies for a successful transition: pricing carbon, aligning the financial system with climate objectives, boosting public spending on sustainable infrastructure, deploying low-carbon industrial and innovation policy, building resilience and adapting to the climatic changes that are coming, better measurement of well-being and sustainability, and crucially, making the transition fair by ensuring socially just outcomes.

This paper is a draft of a chapter that has been accepted for publication by Oxford University Press in the forthcoming book titled: “How to Achieve Inclusive Growth”, edited by V. Cerra, B. Eichengreen, A. El-Ganainy, and M. Schindler, due for publication in 2021.