As the world's economies become more integrated and the global economy subsequently grows, there is increasing concern regarding how such trends will affect the environment. In fact, the relationship between globalization and the environment has become quite contentious in policy circles. In...

We study the macro-financial relevance of climate transition risks for sovereigns that can materialize as a result of the introduction of low-carbon policies in a trading partner country. We define this notion as climate transition spillover risk, and we apply it to the analysis of the...