Paper is open access in Environmental Research Letters iopscience.iop.org/article/10.1... 3/3

As climate change continues, these food price spikes will likely worsen, affecting in particular the poor (both poor countries and poor people within richer countries). That's a challenge for MonPol, since these prices matter for inflation expectations 2/3

And yet the Fed has stopped doing research on climate change. As I've always said, climate doesn't care about your political views

My hot tip is to take a look on the @iea.org website for data and reports on AI energy demands and the green transition. Tomorrow is a good day for that

This work draws on my recent Working Paper with Sehrish Usman and Guzmán Gonzalez-Torres Fernandez. We also study the economic impact of heatwaves and droughts for those interested 6/6 www.ecb.europa.eu/pub/pdf/scpw...

Moreover, the impact of events spreads beyond the affected region through supply-chain linkages. See the excelent work by Gert Bijnens et al on the Belgian experience. www.nbb.be/en/articles/...

Adaptation, through spending on floods defences, helps reduce the incidence of floods and has medium term economic benefits, see the work of Matteo Ficarra and Rebecca Mari 4/6 bankunderground.co.uk/2024/11/29/w...

Economic and institutional characteristics that strongly correlate with income, such as financial constraints, quality of governance and public infrastructure, may affect long-run economic outcomes. This includes insurance. Yet only a quarter of damages are covered in Europe. 3/6

In high-income regions, there's a surge of construction activity and investment, driving up economic activity and productivity in the medium term. But the reverse happens in lower-income regions.

Link to Bulletin box here: 2/6
www.ecb.europa.eu/press/econom...

talent.ecb.europa.eu/careers/JobD...

*England and Wales Cricket Board

Finally, our estimation technique is fantastic at isolating individual events, but that means we ignore prolonged droughts, regions repeatedly hit by events and compound drought/heatwaves. That means we likely underestimate the full economic impact of extreme events 5/5

Floods are the interesting case. For high-income regions, investment, capital, productivity and output all increase, a genuine case of "build back better". But the opposite is true of less well-off regions. That is why it's vital to ensure proper insurance coverage and bolster EU disaster funds. 4/5

Impact of droughts also intensifies over time, partly through lower population. After 4 years, output is 2.4% lower on average. Agriculture impacted, as are services. 3/5

For heatwaves, we find an average impact on output of -1.4% after four years. We also find evidence suggestive of adaptation spending. In hotter regions, capital increases but productivity falls. We don't see either impact in cooler regions, where construction gets a boost. 2/5