Thinking macroeconomic vulnerabilities in the context of low-carbon transition

The transition to a low-carbon and climate resilient economy is a process of important restructuring of the productive network where sunset industries will decline and sometimes disappear and where sunrise industries will emerge and flourish. As this process takes place, all aspects of the economy will be impacted: from demand to supply, from public to private sectors, from finance to the informal economy. While there is a growing literature on the macroeconomic consequences of these transitions there lacks an analytical framework that allows perceiving in a comprehensive and systematic way the vulnerabilities of such structural change dynamics, particularly in the context of developing and emerging economies. This paper proposes such a framework highlighting how fiscal, monetary, financial and external dimensions can be integrated. The framework can then be used to question the robustness of transition dynamics and pinpoint where extra attention should paid.