{
  "title": "Stress Testing the Global Economy to Climate Change-Related Shocks in Large and Interconnected Economies",
  "publication": "IMF Working Papers, September 16, 2022",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2022/09/16/stress-testing-the-global-economy-to-climate-change-related-shocks-in-large-and-523566",
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  "summary": "We stress test the global economy to extreme climate change-related shocks on large and interconnected economies. Our analysis (i) identifies large and interconnected economies vulnerable to climate change-related shocks; (ii) estimates these economies’ external financing needs-at-risk due to these",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Purpose: Stress test the global economy to extreme climate change-related shocks on large and interconnected economies.\n- Analytical steps:\n  - Identify large and interconnected economies vulnerable to climate change-related shocks.\n  - Estimate these economies’ external financing needs-at-risk due to these shocks.\n  - Quantify the spillovers to the global economy using a global network model."
    },
    {
      "heading": "Key findings",
      "content": "- Large and interconnected economies vulnerable to climate change could trigger a drain of $1.8 trillion in international reserves.\n- The $1.8 trillion drain represents 2 percent of 2019’s global GDP.\n- Domestic and multilateral macroeconomic policies can reduce these global losses to about $0.8 trillion.\n- The scenario underscores the importance of considering global spillovers when assessing the impact of climate change-related shocks."
    },
    {
      "heading": "Methodology and analytical focus",
      "content": "- Vulnerability identification of large and interconnected economies to climate change-related shocks.\n- Estimation of external financing needs-at-risk for these economies.\n- Quantification of spillovers through a global network model."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Domestic macroeconomic policies can mitigate large reserve outflows resulting from climate change-related shocks.\n- Multilateral macroeconomic policy coordination can further reduce global losses.\n- Assessments of climate-related shocks should incorporate global spillovers to capture systemic implications."
    },
    {
      "heading": "Keywords and subjects emphasized",
      "content": "- Subjects: Climate change, Climate policy, Environment, Financial sector policy and analysis, Natural disasters, Stress testing.\n- Keywords: CDS spread, Climate change, climate change risk, climate change vulnerability, Climate policy, climate vulnerability, external financing-needs-at-risk, Global, multilayered networks, Natural disasters, Stress testing, vulnerability to climate change.\n\nCamilo E Tovar Mora, Yiqun Wu, and Tianxiao Zheng, September 16, 2022.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2022/09/16/stress-testing-the-global-economy-to-climate-change-related-shocks-in-large-and-523566"
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    "Authors: Camilo E Tovar Mora, Yiqun Wu, Tianxiao Zheng",
    "Published: September 16, 2022",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400219641.001",
    "Purpose: Stress test the global economy to extreme climate change-related shocks on large and interconnected economies.",
    "Analytical steps:",
    "Large and interconnected economies vulnerable to climate change could trigger a drain of $1.8 trillion in international reserves.",
    "The $1.8 trillion drain represents 2 percent of 2019’s global GDP.",
    "Domestic and multilateral macroeconomic policies can reduce these global losses to about $0.8 trillion.",
    "The scenario underscores the importance of considering global spillovers when assessing the impact of climate change-related shocks.",
    "Vulnerability identification of large and interconnected economies to climate change-related shocks.",
    "Estimation of external financing needs-at-risk for these economies.",
    "Quantification of spillovers through a global network model.",
    "Domestic macroeconomic policies can mitigate large reserve outflows resulting from climate change-related shocks.",
    "Multilateral macroeconomic policy coordination can further reduce global losses.",
    "Assessments of climate-related shocks should incorporate global spillovers to capture systemic implications.",
    "Subjects: Climate change, Climate policy, Environment, Financial sector policy and analysis, Natural disasters, Stress testing.",
    "Keywords: CDS spread, Climate change, climate change risk, climate change vulnerability, Climate policy, climate vulnerability, external financing-needs-at-risk, Global, multilayered networks, Natural disasters, Stress testing, vulnerability to climate change.",
    "**Working Paper**"
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