This paper empirically examines the link between the cost of sovereign borrowing and climate risk for 40 advanced and emerging economies. Controlling for a large set of domestic and global factors, the paper shows that both vulnerability and resilience to climate risk are important factors...

We empirically examine the link between the cost of sovereign borrowing and climate risk for 40 advanced and emerging economies. Controlling for a large set of domestic and global factors, we show that both vulnerability and resilience to climate risk are important factors driving the cost of...

The European Union has reformed its fiscal rules in late 2024, making debt sustainability analysis (DSAs) the central steering tool for European fiscal policy. DSAs will be used to project debt-to-GDP ratios and derive fiscal policy requirements. In this paper, we show that DSAs currently...

We analyze the relationship between climate risk and fiscal space in a systematic and rigorous way. To do so, we use panel local projections to examine the role of political stability and financial development in the relationship. For a sample of 199 economies in 1990-2022, we first empirically...

We re-examine the determinants of current account balances (CAB) and the saving-investment nexus with focus on emerging market and developing economies (EMDEs). We are in a new age in terms of facing not just economic challenges but also other non-economic challenges such as global climate...

This paper examines the impact of natural disasters on fiscal and external sustainability across 134 economies from 1980 to 2023. We adopt a two-step approach: first, we estimate country-specific, time-varying sustainability coefficients; second, we assess their determinants using Weighted Least...

We estimate the effects of temperature anomalies – temperature’s deviation from its long-run mean – on sovereign default risk and explore the transmission channels. We use cross-country panel data covering 76 countries over the period 1999-2017. Our results suggest that an increase of...

This article discusses the links between climate and debt sustainability by focusing on how climate mitigation and adaptation are paid for, and who pays for it. This requires thinking about instruments such as sovereign bonds, carbon credits, conditional official grants and debt relief from both...