{
  "title": "Macroeconomic Effects of Climate Change in an Aging World",
  "publication": "IMF Working Papers, December 16, 2022",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2022/12/16/macroeconomic-effects-of-climate-change-in-an-aging-world-527073",
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  "summary": "Climate and demographic changes are two major long-term trends that are evolving simultaneously. The global population is aging, while climate change is increasing the frequency and severity of weather-related disasters and lowering productivity.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- The paper examines three simultaneous long-term trends in a common framework: global population aging; increasing frequency and severity of weather-related disasters; and lowering productivity due to climate change.\n- Simulation results suggest that while aging drags down the real interest rate, climate change puts upward pressure on the real interest rate and inflation.\n- As climate change intensifies, it becomes the dominant factor shaping macroeconomic variables, resulting in higher inflation and a higher debt-to-GDP ratio, and requiring tighter fiscal and monetary policies.\n- Economic uncertainty induced by climate change amplifies these effects."
    },
    {
      "heading": "Key findings and projections (from simulations)",
      "content": "- Aging → downward pressure on the real interest rate.\n- Climate change → upward pressure on the real interest rate.\n- Climate change → upward pressure on inflation.\n- Intensifying climate change → becomes the dominant factor for macroeconomic outcomes.\n- Intensifying climate change → higher inflation and higher debt-to-GDP ratio.\n- Economic uncertainty from climate change → amplification of the macroeconomic effects of climate change."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Tighter fiscal policy is required in response to higher debt-to-GDP ratios driven by climate change.\n- Tighter monetary policy is required in response to higher inflation driven by climate change.\n- Policymakers should account for the interaction between demographic trends (aging) and climate-driven shocks when designing macroeconomic policy."
    },
    {
      "heading": "Analytical approach",
      "content": "- Uses a common simulation framework to analyze the joint macroeconomic effects of demographic aging, weather-related disaster frequency/severity, and productivity declines associated with climate change.\n- Focuses on macroeconomic variables including the real interest rate, inflation, and the debt-to-GDP ratio.\n- Emphasizes the role of economic uncertainty induced by climate change in amplifying simulated outcomes.\n\nIMF Working Paper — \"Macroeconomic Effects of Climate Change in an Aging World\" (Vimal V Thakoor, Engin Kara), December 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/2022/12/16/macroeconomic-effects-of-climate-change-in-an-aging-world-527073"
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    "Authors: Vimal V Thakoor, Engin Kara",
    "Published: December 16, 2022",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400226397.001",
    "The paper examines three simultaneous long-term trends in a common framework: global population aging; increasing frequency and severity of weather-related disasters; and lowering productivity due to climate change.",
    "Simulation results suggest that while aging drags down the real interest rate, climate change puts upward pressure on the real interest rate and inflation.",
    "As climate change intensifies, it becomes the dominant factor shaping macroeconomic variables, resulting in higher inflation and a higher debt-to-GDP ratio, and requiring tighter fiscal and monetary policies.",
    "Economic uncertainty induced by climate change amplifies these effects.",
    "Aging → downward pressure on the real interest rate.",
    "Climate change → upward pressure on the real interest rate.",
    "Climate change → upward pressure on inflation.",
    "Intensifying climate change → becomes the dominant factor for macroeconomic outcomes.",
    "Intensifying climate change → higher inflation and higher debt-to-GDP ratio.",
    "Economic uncertainty from climate change → amplification of the macroeconomic effects of climate change.",
    "Tighter fiscal policy is required in response to higher debt-to-GDP ratios driven by climate change.",
    "Tighter monetary policy is required in response to higher inflation driven by climate change.",
    "Policymakers should account for the interaction between demographic trends (aging) and climate-driven shocks when designing macroeconomic policy.",
    "Uses a common simulation framework to analyze the joint macroeconomic effects of demographic aging, weather-related disaster frequency/severity, and productivity declines associated with climate change.",
    "Focuses on macroeconomic variables including the real interest rate, inflation, and the debt-to-GDP ratio.",
    "Emphasizes the role of economic uncertainty induced by climate change in amplifying simulated outcomes.",
    "**Working Paper**"
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