In a stock-flow consistent macrodynamic model featuring two crucial endogenous destabilizing channels, namely debt accumulation and climate change, we perform a sensitivity analysis on four fundamental parameters of the climate and economic systems: the climate sensitivity, the inertia of the carbon cycle, the labor productivity growth, and the share of damages sustained by the capital stock. We find that we have a mere 0.36% chance of achieving the 2°C warming target of the Paris Agreement in a no policy scenario, while a carbon tax and a subsidy to mitigation efforts increase that probability to 5.64% and 25.6% respectively. We also investigate the trade-off between mitigating climate change damages and staying in a sustainable debt trajectory. While implementing effective climate policies comes at the cost of increasing the debt burden, the increasing risk of over-indebtedness seems to be limited even for very stringent policies.
-
on the same topic
Research documentpublished in November 2024Research documentpublished in October 2024Institutional documentFinancial CommunicationStrategy Documentspublished in October 2024Vidéopublished in September 2024Reviews and Activity Reportspublished in September 2024Research documentpublished in August 2024 -
from the same author
Research documentpublished in October 2024Research documentpublished in October 2024Research documentpublished in October 2024Research documentpublished in October 2024Research documentpublished in October 2024Research documentpublished in October 2024 -
in the same collection
Research documentpublished in October 2024Research documentpublished in October 2024Research documentpublished in September 2024Research documentpublished in September 2024Research documentpublished in September 2024Research documentpublished in August 2024