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Climate Change and Sovereign Risk

Climate change can have a material impact on sovereign risk through direct and indirect effects on public finances. It raises the cost of capital of climate-vulnerable countries and threatens debt sustainability. Governments must climate-proof their economies and public finances or potentially face an ever-worsening spiral of climate vulnerability and unsustainable debt burdens. This study focuses on the complex nexus between climate change and sovereign risk, identifying and scrutinizing six transmission channels through which climate change can amplify sovereign risk and worsen a sovereign’s standing.
Author: Volz, U; et al.
Language: English
Pubished By: SOAS University of London
Pubished date: October 2020

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