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Beyond standard economic approaches: complex networks in climate finance

Author

Listed:
  • Francesca Larosa

    (Department of Economics, Ca' Foscari University of Venice Euro-Mediterranean Center on Climate Change)

  • Nadia Ameli

    (University College of London)

  • Jamie Rickman

    (University College of London)

  • Sumit Kothari

    (University College of London)

Abstract

The financial system is a key tool to enable the shift towards a climate-smart economy: by reallocating capital to low-carbon assets, it internalizes the climate externality. However, the financial sector operates as an ecosystem of evolving agents continuously shaping the outcomes they jointly generate. Hence, the consequences of global warming and the climate impacts are potentially amplified by the micro and meso dynamics of agents interacting with each other and with technologies and institutions in the space they operate. In this working paper, we present a concise but exhaustive review about complex networks models and methods applied to climate finance. We show where networks can overcome the limitations of standard economic models in both macroprudential regulation and capital allocation. We present the main challenges ahead and we discuss the importance of a renewed research-policy dialogue to advance the discipline.

Suggested Citation

  • Francesca Larosa & Nadia Ameli & Jamie Rickman & Sumit Kothari, 2021. "Beyond standard economic approaches: complex networks in climate finance," Working Papers 2021:19, Department of Economics, University of Venice "Ca' Foscari".
    • Handle: RePEc:ven:wpaper:2021:19
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    More about this item

    Keywords

    Complex networks; climate finance; complexity economics; energy transition; climate change;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment

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