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Does climate change lead financial instability?: A benchmark result

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  • Eisei Ohtaki

Abstract

Does climate change lead financial instability? To address this problem, this study builds an overlapping generations model of the environment and money. Contrary to predictions of the majority, it is shown that, under a certain condition, a unique stationary monetary equilibrium exists and is a saddle point. Furthermore, it is shown that the optimal gross rate of money growth, which maximizes the welfare at the stationary monetary equilibrium, exists uniquely and is greater than one.

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  • Eisei Ohtaki, 2023. "Does climate change lead financial instability?: A benchmark result," Working Papers e175, Tokyo Center for Economic Research.
    • Handle: RePEc:tcr:wpaper:e175
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    References listed on IDEAS

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    1. Bosi, Stefano & Desmarchelier, David, 2013. "Demography and pollution," Research in Economics, Elsevier, vol. 67(4), pages 316-323.
    2. Gaetano Bloise & Sergio Currarini & Nicholas Kikidis, 2002. "Inflation, Welfare, and Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 369-386, July.
    3. Celso Brunetti & Benjamin Dennis & Dylan Gates & Diana Hancock & David Ignell & Elizabeth K. Kiser & Gurubala Kotta & Anna Kovner & Richard J. Rosen & Nicholas K. Tabor, 2021. "Climate Change and Financial Stability," FEDS Notes 2021-03-19-3, Board of Governors of the Federal Reserve System (U.S.).
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