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dc.titleClimate Change and Sovereign Risk: A Regional Analysis for the Caribbean
dc.contributor.authorAgarwala, Matthew
dc.contributor.authorBurke, Matt
dc.contributor.authorDoherty-Bigara, Jennifer
dc.contributor.authorKlusak, Patrycja
dc.contributor.authorMohaddes, Kamiar
dc.contributor.orgunitClimate Change Solutions Division
dc.coverageThe Caribbean
dc.date.available2024-04-04T00:04:00
dc.date.issue2024-04-04T00:04:00
dc.description.abstractClimate change is an existential threat to the world economy, with complex, evolving and nonlinear dynamics that remain a source of great uncertainty. There is a bourgeoning literature on the economic impact of climate change, but research on how climate change affects sovereign risks is limited. This paper provides forward-looking regional analysis of the effects of climate change on sovereign creditworthiness, probability of default and the cost of borrowing for the Caribbean economies. Our results indicate that there is substantial variation in the sensitivity of ratings to climate change across the region which is due to the non-linear nature of ratings. Our findings improve the identification and management of sovereign climate risk and provides a forward-looking assessment of how climate change could affect the cost of accessing international finance. As such, it leads to a suite of policy options for countries in the region.
dc.format.extent54
dc.identifier.doihttp://dx.doi.org/10.18235/0012885
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Climate-Change-and-Sovereign-Risk-A-Regional-Analysis-for-the-Caribbean.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectClimate Change
dc.subjectRating
dc.subjectEconomy
dc.subjectGross Domestic Product
dc.subjectSovereign Rating
dc.subjectTourism
dc.subjectInvestment
dc.subject.jelcodeC33 - Panel Data Models • Spatio-temporal Models
dc.subject.jelcodeC53 - Forecasting and Prediction Methods • Simulation Methods
dc.subject.jelcodeG10 - General Financial Markets: General
dc.subject.jelcodeG18 - Government Policy and Regulation
dc.subject.jelcodeH63 - Debt • Debt Management • Sovereign Debt
dc.subject.jelcodeO44 - Environment and Growth
dc.subject.jelcodeO50 - Economywide Country Studies: General
dc.subject.jelcodeQ51 - Valuation of Environmental Effects
dc.subject.jelcodeQ54 - Climate • Natural Disasters and Their Management • Global Warming
dc.subject.keywordsSovereign credit rating;climate change;counterfactual analysis;climate-economy models;sovereign debt;physical risks;Fiscal policy;transition risks;Latin America;Caribbean.
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01574
idb.operationRG-T3906
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