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 […]
Climate Risk in Africa
Are European governments turning to African energy producers? What is the effect of Russia’s illegal invasion of Ukraine on other parts of the world? Will this threaten Africa’s transition to renewable energy? Is there any way to put the brakes on climate risk? On December 12, 2022, the Climate Action Tracker group held a virtual event, where three experts on climate risk discussed how to accelerate the transition to renewable energy and enhance climate action in Africa, with a focus on climate governance. Fossil gas is not the answer To meet the 1.5°C target of the Paris Agreement, “the global […]
E-Growth in Emerging Markets
What is happening in emerging markets? Are there areas where an informed investor can make a profit? What are the pitfalls to avoid? On November 22, 2022, the CFA Society of Toronto hosted a virtual webinar, “Rethinking Emerging Markets: The Case for Growth & How to Capture It.” The speaker was Kevin T. Carter, the founder and Chief Investment Officer of EMQQ Global. Carter began by providing his background. “I pray toward Omaha,” he quipped, because he considers himself an active “value” investor first and foremost, along the lines of “the oracle of Omaha,” Warren Buffett. Carter has collaborated with […]
Inflation & Wage Growth
As the U.S. economy emerges from the pandemic, inflation has been climbing. What effect has this had on average wages? Will it be a long-lasting effect? Recent research by leading economists at the Federal Reserve Bank of San Francisco (FRBSF) dives into these questions. “Our findings show that, since the pandemic, inflation expectations have been playing a more prominent role in wage-setting dynamics than in the past,” say the four authors of a paper released on September 6, 2022. Òscar Jordà is a senior policy advisor, Fernanda Nechio is a vice president, and Celeste Liu and Fabián Rivera-Reyes are both […]
The Beveridge Curve
In early 2021, in the wake of the Covid-19 pandemic, the U.S. saw many workers leave their jobs and seek other employment—leading to record high job vacancies—a phenomenon observed dubbed “the great resignation.” Lately, inflation is rising, markets are cooling, and the great resignation appears to be slowing. The question becomes: How will unemployment rise as growth slows and job vacancies decline? On August 29, 2022, the Federal Reserve Bank of San Francisco (FRBSF) released an Economic Letter titled “Finding a Soft Landing along the Beveridge Curve” that explores the current relationship between unemployment and economic growth. The paper was […]