A Comparative Study of Climate Extremes and Financial Crises
- Although climate extremes and financial crises arise in distinct domains, both are highly disruptive events characterised by strong nonlinearities. We establish a structural analogy between climate extremes and financial crises through three progressively deeper layers: observed impacts, formation mechanisms, and system-level emergence.
Measuring Systemic Climate Risk
- The compounding effect of transition risk and market distress poses a systemic threat to the financial system. We measure this through the expected shortfall under joint climate and market stress, followed by an extreme value analysis under rare but plausible scenarios and comprehensive empirical studies.
Assessing the Role of Insurance in Climate Policy: A DICE Model Framework Under Uncertainty
- Climate change is a dynamic challenge shaped by uncertain feedbacks between the climate system and the economy. Insurance matters as a tool for uncertainty management. We incorporate an insurance mechanism into the Dynamic Integrated Model of Climate and the Economy (DICE) and assess its effects on economic dynamics, mitigation incentives, and the social cost of carbon.
Central Clearing in Managing Corporate Default Clustering in a Warming World
- Since the Global Financial Crisis, regulators have relied more on central counterparties to make derivatives markets safer, but these institutions can also become sources of systemic risk if shocks spread through them. We study how climate-related stress may intensify default clustering and how CCPs can be better designed to manage counterparty risk.
- Available at SSRN: link.
