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Climate change: policies to manage its macroeconomic and financial effects


  • Joaquín Bernal-Ramírez

    () (Banco de la República de Colombia)

  • José Antonio Ocampo

    () (Banco de la República de Colombia)


It is increasingly recognized that climate change generates major macroeconomic and financial risks. There are physical risks associated to the disasters generated by hydrometeorological events and to gradual but persistent changes in temperatures that have structural impacts on economic activity, productivity and incomes. Additionally, the process of adjustment towards a lower-carbon economy, prompted by changes in climate-related policies, technological disruptions and changes in consumer preferences, generates transition risks. After a brief analysis of the macroeconomic, fiscal and tax policies to manage these risks, this paper concentrates on: (i) how financial policies can help improve transparency and climate-related risk disclosure in financial institutions’ balance sheets and assets prices, particularly with appropriate prudential regulation and supervision; and (ii) how those risks could be taken into account in monetary policy and central banks’ balance sheets and operations. The paper ends with some reflections on the Covid-19 pandemic and the will for a “green” recovery. **** ABSTRACT: Cada vez se reconoce con mayor claridad que el cambio climático genera importantes riesgos macroeconómicos y financieros. Existen riesgos físicos asociados a los desastres generados por eventos hidrometeorológicos y a cambios graduales pero persistentes en las temperaturas que tienen un impacto estructural en la actividad económica, la productividad y los ingresos. Además, el proceso de ajuste hacia una economía con bajas emisiones de carbono, inducido por cambios en las políticas relacionadas con el clima, cambios tecnológicos y cambios en las preferencias de los consumidores, genera riesgos de transición. Después de un breve análisis de las políticas macroeconómicas, fiscales y fiscales para gestionar estos riesgos, este documento se concentra en: (i) la forma como las políticas financieras pueden ayudar a mejorar la transparencia y la información de los riesgos relacionados con el clima en los balances de las instituciones financieras y los precios de los activos, particularmente con una política de regulación y supervisión prudencial apropiada; y (ii) cómo se podrían tener en cuenta esos riesgos en la política monetaria y en los balances y operaciones de los bancos centrales. El artículo termina con algunas reflexiones sobre la pandemia de Covid-19 y la voluntad de una recuperación “verde”.

Suggested Citation

  • Joaquín Bernal-Ramírez & José Antonio Ocampo, 2020. "Climate change: policies to manage its macroeconomic and financial effects," Borradores de Economia 1127, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:1127

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    References listed on IDEAS

    1. Ingo Fender & Mike McMorrow & Vahe Sahakyan & Omar Zulaica, 2019. "Green bonds: the reserve management perspective," BIS Quarterly Review, Bank for International Settlements, September.
    2. Simon Dikau & Ulrich Volz, 2019. "Central Bank Mandates, Sustainability Objectives and the Promotion of Green Finance," Working Papers 222, Department of Economics, SOAS, University of London, UK.
    3. Werner, Richard A., 2016. "A lost century in economics: Three theories of banking and the conclusive evidence," International Review of Financial Analysis, Elsevier, vol. 46(C), pages 361-379.
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    More about this item


    Climate change; carbon tax; financial policy; monetary policy; central Banks; cambio climático; impuesto al carbono; política financiera; política monetaria; bancos centrales.;

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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