Energy & Commodities

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Building Resilience to Natural Disasters: An Application to Small Developing States

From a new IMF working paper: “We present a dynamic small open economy model to explore the macroeconomic impact of natural disasters. In addition to permanent damages to public and private capital, the disaster causes temporary losses of productivity, inefficiencies during the reconstruction process, and damages to the sovereign’s creditworthiness. We use the model to study the debt sustainability concerns that arise from the need to rebuild public infrastructure over the medium term and analyze the feasibility of ex ante policies, such as building adaptation infrastructure and fiscal buffers, and contrast these policies with the post-disaster support provided by donors. Investing in resilient infrastructure may prove useful, in particular if it is viewed as complementary to standard infrastructure, because it raises the marginal product of private capital, crowding in private investment, while helping withstand the impact of the natural disaster. In an application to Vanuatu, we find that donors should provide an additional 50% of pre-cyclone GDP in grants to be spent over the following 15 years to ensure public debt remains sustainable following Cyclone Pam. Helping the government build resilience on the other hand, reduces the risk of debt distress and at lower cost for donors.”

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From a new IMF working paper: “We present a dynamic small open economy model to explore the macroeconomic impact of natural disasters. In addition to permanent damages to public and private capital, the disaster causes temporary losses of productivity, inefficiencies during the reconstruction process, and damages to the sovereign’s creditworthiness. We use the model to study the debt sustainability concerns that arise from the need to rebuild public infrastructure over the medium term and analyze the feasibility of ex ante policies,

Read the full article…

Posted by at 9:40 AM

Labels: Energy

The Unequal Burden of Rising Temperatures: How Can Low-Income Countries Cope?

From a new IMF blog:

“The Earth’s warming affects countries very unequally. Even though low-income countries have contributed very little to greenhouse gas emissions, they would bear the brunt of the adverse consequences of rising temperatures, since they tend to be situated in some of the hottest parts of the Earth. ”

ENG_WEO_ch3_map

“The international community must play a key role in supporting low-income countries’ efforts to cope with climate change. Advanced and emerging market economies have contributed the lion’s share to actual and projected warming. Hence, helping low-income countries cope with its consequences is both a moral duty and sound global economic policy that helps offset countries’ failures to fully internalize the costs of greenhouse gas emissions.”

ENG_WEO_ch3_chart3

Continue reading here.

From a new IMF blog:

“The Earth’s warming affects countries very unequally. Even though low-income countries have contributed very little to greenhouse gas emissions, they would bear the brunt of the adverse consequences of rising temperatures, since they tend to be situated in some of the hottest parts of the Earth. ”

ENG_WEO_ch3_map

“The international community must play a key role in supporting low-income countries’ efforts to cope with climate change.

Read the full article…

Posted by at 9:24 AM

Labels: Energy

Oil Prices and Inflation Dynamics: Evidence from Advanced and Developing Economies

We study the impact of fluctuations in global oil prices on domestic inflation using an unbalanced panel of 72 advanced and developing economies over the period from 1970 to 2015. We find that a 10 percent increase in global oil inflation increases, on average, domestic inflation by about 0.4 percentage point on impact, with the effect vanishing after two years and being similar between advanced and developing economies. We also find that the effect is asymmetric, with positive oil price shocks having a larger effect than negative ones. The impact of oil price shocks, however, has declined over time due in large part to a better conduct of monetary policy. We further examine the transmission channels of oil price shocks on domestic inflation during the recent decades, by making use of a monthly dataset from 2000 to 2015. The results suggest that the share of transport in the CPI basket and energy subsidies are the most robust factors in explaining cross-country variations in the effects of oil price shocks during the this period.

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We study the impact of fluctuations in global oil prices on domestic inflation using an unbalanced panel of 72 advanced and developing economies over the period from 1970 to 2015. We find that a 10 percent increase in global oil inflation increases, on average, domestic inflation by about 0.4 percentage point on impact, with the effect vanishing after two years and being similar between advanced and developing economies. We also find that the effect is asymmetric,

Read the full article…

Posted by at 4:42 PM

Labels: Energy

Meeting EU Climate Pledges: Assessing Some Potential Policy Refinements

From a new IMF report:

“For the 2015 Paris Agreement on climate change, the European Union (EU) pledged to reduce greenhouse gas (GHG) emissions by at least 40 percent below 1990 levels by 2030. Policies envisioned to achieve this goal include: tightening the Emissions Trading System (ETS) covering large emitting firms; requirements for energy efficiency, vehicle CO2 emission standards, and renewables; and policies to meet national-level targets for small-scale emissions sources outside of the ETS. This note analyses various refinements to the envisioned policy package that might meet the 2030 commitments with lower costs and greater fiscal and domestic environmental benefits (though implications for energy security are not considered). The results suggest potential economic and fiscal benefits from greater reliance on emissions pricing—for example, replacing tighter energy efficiency regulations with a higher ETS emissions price and use of carbon taxes (or tax-like instruments) for emissions outside the ETS sector. Other options, such as equating carbon charges across sectors and across countries, yield some economic benefits at the EU level, but do not raise revenue and, without compensating measures, impose uneven burdens across countries.”

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From a new IMF report:

“For the 2015 Paris Agreement on climate change, the European Union (EU) pledged to reduce greenhouse gas (GHG) emissions by at least 40 percent below 1990 levels by 2030. Policies envisioned to achieve this goal include: tightening the Emissions Trading System (ETS) covering large emitting firms; requirements for energy efficiency, vehicle CO2 emission standards, and renewables; and policies to meet national-level targets for small-scale emissions sources outside of the ETS.

Read the full article…

Posted by at 1:34 PM

Labels: Energy

Environment and Climate Change in Vietnam

A new IMF report finds:

Vietnam is highly affected by climate change. Its long coastline, geographic location, and diverse topography and climates contribute to Vietnam being one of the most hazard-prone countries in the Asia-Pacific region. Given the high concentration of the population and economic assets in coastal lowlands and the significant role played by agriculture and fisheries in the economy, Vietnam is ranked among the five countries likely to be most affected by climate change. Over the last 50 years, temperatures have increased twice as fast as the global average, the sea level has risen by 20 centimeters and the frequency and intensity of extreme weather events (drought, flood, salinization) have risen sharply. Natural disasters result in 470 fatalities and cost 0.8 percent of GDP (annual average between 1990 and 2016).

Climate risks pose immense challenges. Based on the authorities’ climate change scenarios, by the end of the century, sea levels are expected to rise by up to a meter. Sea waters would then cover 40 percent of the Mekong Delta area (where half of the country’s rice is produced), 3 percent of coastal provinces and 20 percent of Ho Chi Minh City, impacting directly 10–12 percent of the population and reducing GDP by 10 percent. The sectors most affected will be agriculture, aquaculture, energy transportation and tourism.”

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Continue reading here.

 

A new IMF report finds:

“Vietnam is highly affected by climate change. Its long coastline, geographic location, and diverse topography and climates contribute to Vietnam being one of the most hazard-prone countries in the Asia-Pacific region. Given the high concentration of the population and economic assets in coastal lowlands and the significant role played by agriculture and fisheries in the economy, Vietnam is ranked among the five countries likely to be most affected by climate change.

Read the full article…

Posted by at 11:27 PM

Labels: Energy

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