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Policymakers across the world are striving to tackle the century-defining challenge of climate change without undermining potential growth. This paper examines the impact of structural reforms in the energy sector (electricity and gas) on enviromental outcomes and green growth indicators in a panel of 25 advanced economies during the period 1970-2020. We obtain striking results. First, while structural reforms so far failed in reducing greenhouse gas emissions per capita, there is some evidence for greater effectiveness in lowering emissions per unit of GDP. Second, although energy reforms are not associated with higher supply of renewable energy as a share of total energy supply, they appear to stimulate a sustained increase in environmental inventions and patents per capita over the medium term. We also find strong evidence of nonlinear effects, with market-friendly energy reforms leading to better environmental outcomes and green growth in countries with stronger environmental regulations. Looking forward, therefore, structural reforms should be designed not just for market efficiency but also for green growth.

Macroeconomics --- Economics: General --- Environmental Conservation and Protection --- Environmental Economics --- Environmental Policy --- Distribution: General --- Personal Income, Wealth, and Their Distributions --- Legal Monopolies and Regulation or Deregulation --- Economics of Regulation --- Institutions and the Macroeconomy --- Environment and Growth --- Climate --- Natural Disasters and Their Management --- Global Warming --- Environmental Economics: General --- Environmental Economics: Government Policy --- Economic & financial crises & disasters --- Economics of specific sectors --- Economic growth --- Climate change --- Environmental economics --- Environmental policy & protocols --- Structural reforms --- Macrostructural analysis --- Sustainable growth --- Greenhouse gas emissions --- Environment --- Environmental policy --- Currency crises --- Informal sector --- Economics --- Economic development --- Greenhouse gases --- Environmental sciences

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Policymakers across the world are striving to tackle the century-defining challenge of climate change without undermining potential growth. This paper examines the impact of structural reforms in the energy sector (electricity and gas) on enviromental outcomes and green growth indicators in a panel of 25 advanced economies during the period 1970-2020. We obtain striking results. First, while structural reforms so far failed in reducing greenhouse gas emissions per capita, there is some evidence for greater effectiveness in lowering emissions per unit of GDP. Second, although energy reforms are not associated with higher supply of renewable energy as a share of total energy supply, they appear to stimulate a sustained increase in environmental inventions and patents per capita over the medium term. We also find strong evidence of nonlinear effects, with market-friendly energy reforms leading to better environmental outcomes and green growth in countries with stronger environmental regulations. Looking forward, therefore, structural reforms should be designed not just for market efficiency but also for green growth.

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What is the impact of climate change on inflation and growth dynamics? This is not a simple question to answer as climate shocks tend to be ubiquitous, but with opposing effects simultaneously on demand and supply. The extent of which climate-related shocks affect inflation and economic growth also depends on long-run scarring in the economy and the country’s fiscal and institutional capacity to support recovery. In this paper, we use the local projection method to empirically investigate how climate shocks, as measured by climate-induced natural disasters, influence inflation and economic growth in a large panel of countries over the period 1970–2020. The results shows that both inflation and real GDP growth respond significantly but also differently in terms of direction and magnitude to different types of disasters caused by climate change. We split the full sample of countries into income groups—advanced economies and developing countries—and find a striking contrast in the impact of climate shocks on inflation and growth according to income level, state of the economy, and fiscal space when the shock hits.

Business Fluctuations --- Climate change --- Climate --- Climatic changes --- Currency crises --- Cycles --- Deflation --- Economic & financial crises & disasters --- Economic History: Macroeconomics and Monetary Economics --- Economics of specific sectors --- Economics --- Economics: General --- Environment --- Environmental Economics --- Fiscal Policy --- Fiscal policy --- Fiscal space --- Global Warming --- Growth and Fluctuations: General, International, or Comparative --- Inflation --- Informal sector --- Macroeconomics --- Natural Disasters and Their Management --- Natural Disasters --- Natural disasters --- Price Level --- Prices

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Many emerging market and developing economies face a difficult trade-off between economic support and fiscal sustainability. Market-oriented structural reforms ease this trade-off by promoting economic growth and strengthening public finances. The empirical analysis in this note, based on 62 EMDEs over 1973-2014, shows that reforms are associated with sizeable and long-lasting reductions in the debt-to-GDP ratio mainly through higher fiscal revenues and lower borrowing costs. These effects are larger in countries with greater tax efficiency, lower informality, and higher initial debt. Moreover, a model-based analysis elaborates on how such fiscal gains can be enhanced when revenue windfalls associated with reforms are saved or channeled through higher public investment.

Asset and liability management --- Currency crises --- Debt Management --- Debt reduction --- Debt --- Debts, External --- Debts, Public --- Economic & financial crises & disasters --- Economic sectors --- Economics of Regulation --- Economics of specific sectors --- Economics --- Economics: General --- Emerging and frontier financial markets --- Exports and Imports --- Finance --- Finance: General --- Financial crises --- Financial markets --- Financial Risk Management --- Financial services industry --- Fiscal Policy --- Fiscal policy --- Fiscal stance --- Foreign Exchange --- General Financial Markets: General (includes Measurement and Data) --- Informal Economy --- Informal sector --- International economics --- International Lending and Debt Problems --- Macroeconomics --- Public debt --- Public finance & taxation --- Public Finance --- Sovereign Debt --- Underground Econom