Shelter Inflation
The welcome news this summer is that the overall rate of inflation is easing up, both in the U.S., where it has dropped to its lowest level in over two years, and to a lesser extent, in Canada, where in July, Canada’s inflation rate fell to 2.8 percent. Gasoline is pulling the inflation rate down, while food and mortgages were pushing it up. How has the U.S. housing market responded to the rise in interest rates? How do recent trends in the cost of house prices and rents affect the likelihood of future shelter inflation? “Various market indicators, including house […]
Heat Lowers the GDP
Every season, but particularly summer, reminds us that global warming is occurring at an alarming rate. The average global temperature will continue to rise over time if people do not take substantial action to reduce greenhouse gases, especially carbon emissions. What effect will soaring temperatures have on economic productivity? How will warming effects be distributed over the globe? Will these have a long-lasting effect on the GDP? Recent research by economists at the Federal Reserve Bank of San Francisco (FRBSF) delves into these questions. “Our findings show that total global losses in output per person could be substantial,” say the […]
The Meerkat Way
Given that climate change is the biggest economic upheaval of our age, what can risk professionals do? What, exactly, is meant by a “net-zero transition,” and why does each organization need a transition plan to reach it? How should risk professionals get started? On May 23, 2023, the membership of the Global Association of Risk Professionals (GARP) was invited to a one-hour webinar titled “Net-Zero Transition Plans” that promised to answer these questions and more. Tony Rooke, Executive Director and Head of Transition Finance at the Glasgow Financial Alliance for Net Zero (GFANZ), delivered the webinar. GFANZ is a global […]
Carbon Pricing
What is the best way to address climate change? If too much carbon is released in the air, how can emissions be reduced? By regulating corporations or by imposing costs on consumers in the form of a carbon tax? Moreover, even if a solution is found, not all nations, and not all people within nations, will agree on how to tackle the problem. In the words of Professor Barry Rabe, author of Can We Price Carbon? “Compelling ideas from economics do not necessarily suspend the laws of politics.” On May 4, 2023, Jessica Green, professor of political science at University […]
Heated Exchange
Climate-related natural disasters are increasing in frequency and severity and costs. Since climate change is not equal across countries, how does a country’s exchange rate respond to such shocks? Furthermore, is it possible to build an economic model to predict future changes? On April 6, 2023, Galina Hale, professor of economics at the University of California at Santa Cruz, delivered a webinar about the effect of climate change on exchange rates. This was part of the series of talks sponsored by the Federal Reserve Bank of San Francisco (FRBSF), titled the Virtual Seminar on Climate Economics. She reported results from […]
Green Stocks vs. Brown
Comparing the stock prices of climate-friendly (“green”) companies versus non-climate-friendly (“brown”) companies, which type will give better performance? Has this prediction been changing over the past decade—and why? And what are the recent pressures? On March 23, 2023, Michael Bauer, professor of economics at the University of Hamburg, delivered a webinar on green vs. brown stocks as part of the series of talks sponsored by the Federal Reserve Bank of San Francisco (FRBSF), titled the Virtual Seminar on Climate Economics. He reported results from a recent paper co-authored with three other economists appearing in the Journal of Climate Finance. Bauer […]
The Forest Awakens
The Amazon rainforest is an iconic world ecosystem often referred to as “the lungs of the planet.” Yet it is being destroyed day by day. What systems are in place to monitor loss of valuable ecosystems? How effective are these systems? In 2019, the United Nations announced the “UN Decade on Ecosystem Restoration.” This international body estimates that restoration of 350 million hectares of degraded land between now and 2030 could generate USD 9 trillion in ecosystem services and take an additional 13-26 gigatons of greenhouse gases out of the atmosphere, gases that are warming the planet. On March 9, […]
Ask the Fed
“The Fed is trying to achieve price stability and maximum employment,” said Sylvain Leduc, Executive Vice President and Director of Research of the U.S. Federal Reserve Bank of San Francisco (FRBSF), known informally as “the Fed.” In terms of employment levels, “we are back to where we were pre-pandemic.” He was speaking on February 7, 2023, at a public briefing in which he outlined the FRBSF’s thinking on economic matters. He showed a graph of unemployment, which reached a peak at the start of the pandemic in early 2020. The monthly change in nonfarm payroll employment had a downward arc. “Job […]
Disruptions, Costs & Markets
The Covid-19 pandemic has caused supply chain disruptions. How much have the costs of international trade increased? What impact has this had on the U.S. economy? What is the effect on labor force participation? Can existing models properly quantify these effects? Recent research by three leading economists tried to model the real-life situation of U.S. dependence on a global supply chain and what happened when parts of that chain were broken. (“Broken” encompasses several scenarios: “ports being closed or operating at partial capacity, fewer workers being available for health reasons, and a shortage of shipping containers, among other challenges.”) On […]
Chemistry and the Economy
Risks are multiplying and becoming more complex. The chemical industry is intrinsically connected to the economy. Can chemistry help solve the biggest crises facing us today? On December 15, 2022, the American Chemical Society hosted a virtual webinar, “Chemistry and the Economy.” The moderator was Bill Carroll, principal of Carroll Applied Science, who spoke to Paul Hodges, chairman of the Swiss-based strategy consulting firm New Normal. In speaking about risks, Hodges does not beat around the bush. He began with what he called “the four horsemen of the apocalypse.” He stated, “First there was the pandemic and associated supply chain […]