Cross-Border Risks of a Global Economy in Mid-Transition

ByEtienne Espagne, William Oman, Jean-François Mercure, Romain Svartzman, Ulrich Volz, Hector Pollitt, Gregor Semieniuk, Emanuele Campiglio

September 8, 2023

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper analyzes the cross-border risks that could result from a decarbonization of the world economy. We develop a typology of cross-border risks and their respective channels. Our qualitative and quantitative scenario analysis suggests that the mid-transition – a period during which fossil-fuel and low-carbon energy systems co-exist and transform at a rapid pace – could have profound stability and resilience implications for global trade and the international financial system.

Subject: Climate policy, Environment, Exports, International trade, Non-renewable resources, Technology

Keywords: asset purchase, baseline export, baseline GDP, Climate change, Climate policy, cost of capital, cross-border risks, energy export, Exports, Global, international money and finance., Non-renewable resources, trade, transition risks

Pages:
59
Volume:
2023
DOI:
https://doi.org/10.5089/9798400254550.001
Issue:
184
Series:
Working Paper No. 2023/184
Stock No:
WPIEA2023184
ISBN:
9798400254550
ISSN:
1018-5941

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