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Diego A. Cerdeiro, Andras Komaromi, Mr. Helge Berger, and Tristan Walker

more reluctant to impose lockdowns. To control for these idiosyncratic factors that also affect imports and can be correlated with our foreign lockdown exposure measure, our specification includes country fixed effects. The prevalence of containment measures can also be correlated with other relevant factors over the time dimension. For example, as the virus spreads and more countries go under lockdowns, rising health and economic uncertainty may boost households’ precautionary saving, and revised expectations in financial markets may lead to a tightening of

Alan Feng, Haishi Li, and Mr. Ananthakrishnan Prasad

, historical damages, exposures to future climate change risks) and the country’s trade patterns (upstream and downstream trade shares with all trade partners including the home country). With these exposure measures, we construct a pair of global spillover indexes of upstream and downstream climate risks. The spillover indexes capture the extent globalization reduces the cross-country dispersion in exposures to global climate risks. Intuitively, consider a landlocked country a in the high latitudes. If country A was a closed economy, it might have limited exposures to

Alan Feng and Haishi Li
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.
Signe Krogstrup and Cédric Tille
The literature on the drivers of capital flows stresses the prominent role of global financial factors. Recent empirical work, however, highlights how this role varies across countries and time, and this heterogeneity is not well understood. We revisit this question by focusing on financial intermediaries’ funding flows in different currencies. A concise portfolio model shows that the sign and magnitude of the response of foreign currency funding flows to global risk factors depend on the financial intermediary’s pre-existing currency exposure. An analysis of a rich dataset of European banks’ aggregate balance sheets lends support to the model predictions, especially in countries outside the euro area.
Mr. Eugenio M Cerutti, Mr. Patrick M. McGuire, and Mr. Stijn Claessens

of Foreign Credit Exposures B. Improving the Measurement of Foreign Rollover Risks C. Modeling Together International Banks’ Assets and Liabilities Figure 1. Foreign Credit Exposure Measure 2. Reliance on Foreign Bank Credit 3. On-balance Sheet USD Positions at Long-USD European Banks 4. Shock Propagation Across Borders Through Bank Losses and Deleveraging 5. Effect of Foreign Credit Losses on the Balance Sheet of Country j Banks 6. Effect of a Funding Shock on Balance Sheet of Borrower Country j Banks Box 1. The BIS International Banking