We Are All in the Same Boat: Cross-Border Spillovers of Climate Risk through International Trade and Supply Chain

We Are All in the Same Boat: Cross-Border Spillovers of Climate Risk through International Trade and Supply Chain
READ MORE...
Volume/Issue: Volume 2021 Issue 013
Publication date: January 2021
ISBN: 9781513564586
$18.00
Add to Cart by clicking price of the language and format you'd like to purchase
Available Languages and Formats
paperback else
pdf else
epub else
English
Prices in red indicate formats that are not yet available but are forthcoming.
Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Finance , Money and Monetary Policy , Environmental Economics , Natural Disasters , climate risk , financial spillover , supply chain , financial stability , WP , risk exposure , disaster damage , spillover index , exposure measure , assets ratio , expected return , Climate change , Stock markets , Foreign currency exposure , Financial sector , Natural disasters , Global

Summary

Are assets in a landlocked country subject to sea-level rise risk? In this paper, we study the cross-border spillovers of physical climate risks through international trade and supply chain linkages. As we base our findings on historical data between 1970 and 2018, we observe that globalization increased the similarity of countries’ global climate risk exposures. Exposures to foreign climatic disasters in major trade partner countries (both upstream and downstream) lower the home-country stock market valuation for the aggregate market and for the tradable sectors. We also find that exposures to foreign long-term climate change risks reduce the asset price valuations of the tradable sectors at home. Findings in this paper suggest that climate adaptation efforts in a country can have positive externalities on other countries’ macrofinancial performance and stability through international trade.