The effect of climate-related risks on forecasts and expectations
The COVID19 Pandemic teaches us the hard lesson that global crises require timely and effective government policies. Although the Pandemic was hardly predictable and, therefore, countermeasures lag, it is unquestionable that we are on the verge of a climate crisis which requires a higher level of prevention and mitigation strategies. One of the major economic research challenges is how to deal with climate-related risks, that is how to assess, price and incorporate such risks in macro-finance models. Focusing on physical risks (earthquakes, flooding, etc.), I am interested in studying the effect of climate-related risks on monetary and fiscal stability. First, I plan to study if and how forecasters incorporate these risks in predicting a series of macroeconomics and financial variables. Consequently, I will investigate how households modify their consumption and financial behaviors in response to forecasters’ predictions and experienced environmental shocks.
4-Economics, Finance & the World Economy