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Business and Economics > Production and Operations Management

You are looking at 1 - 10 of 34 items for :

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Cover IMF Working Papers
The Economic Costs of Temperature Uncertainty
Luca Bettarelli
,
Davide Furceri
,
Michael Ganslmeier
, and
Marc Schiffbauer
Beyond its environmental damage, climate change is predicted to produce significant economic costs. Combining novel high-frequency geospatial temperature data from satellites with measures of economic activity for the universe of US listed firms, this article examines a potentially important channel through which global warming can lead to economic costs: temperature uncertainty. The results show that temperature uncertainty—by increasing power outages, reducing labor productivity, and increasing the degree of exposure of firms to environmental and non-political risks, as well as economic uncertainty at the firm-level—persistently reduce firms’ investment and sales. This effect varies across firms, with those characterized by tighter financial constraints being disproportionally more affected.
Keywords:
Temperatures; Temperature Volatility; Uncertainty; Firms.; temperature uncertainty; impact of Temperature volatility; firms' characteristic; temperature data; firms' investment; Climate change; Labor productivity; Natural disasters; Employment; Global
Cover IMF Working Papers
Shedding Light on the Local Impact of Temperature
Da Hoang
,
Duong Trung Le
,
Ha Nguyen
, and
Nikola Spatafora
We use a new dataset to estimate the impact of temperature on economic activity at a more geographically and temporally disaggregated level than the existing literature. Analyzing 30-kilometer grid cells at a monthly frequency, temperature has a negative, highly statistically significant, and quantitatively large effect on output: a 1 °C increase in monthly temperature is associated with a 0.77 percent reduction in nighttime lights, a proxy for local economic activity. The effects of even a temporary increase in temperature persist for almost one year after the shock. Increases in temperature have an especially large, negative impact on growth in poorer countries, indicating that they are more vulnerable to the impact of climate change.
Keywords:
Climate change; temperature; economic growth; nighttime lights; B. data description; IMF working paper No. 24/178; impact of temperature; Google Earth engine; temperature shock; Productivity; Global
Cover IMF Staff Country Reports
Burkina Faso: Selected Issues
International Monetary Fund. African Dept.
This Selected Issues paper highlights trends, impacts, and policy implications in Burkina Faso. Regional insecurity has also created increased cross-border displacement, both into and out of Burkina Faso. Burkina Faso has devised several policy responses, including in cooperation with international partners. Despite these measures, the persistent crisis of forced displacement means that the need for humanitarian assistance remains. A successful strategy for addressing the displacement crisis should be broad-based in terms of partners and approaches. Given the country's economic and financial challenges, an in-depth understanding is needed of the economic impact of forced displacement and possible solutions. In other countries, studies show positive economic outcomes to host regions of forced displacement. The inclusion of forced displaced persons in the Unified Social Register and national social nets programs would facilitate the implementation of assistance and, along with other national repositories help improve urban management and budget planning.
Keywords:
growth experience; C. socio-economic Impact; C. policy response; impact of climate change; agriculture productivity; Climate change; Productivity; Food security; Global; Sub-Saharan Africa
Cover IMF Working Papers
Public Perceptions of Canada’s Investment Climate: A Natural Language Processing-Based Approach
Flora Lutz
,
Yuanchen Yang
, and
Chengyu Huang
Canada’s muted productivity growth during recent years has sparked concerns about the country’s investment climate. In this study, we develop a new natural language processing (NPL) based indicator, mining the richness of Twitter (now X) accounts to measure trends in the public perceptions of Canada’s investment climate. We find that while the Canadian investment climate appears to be generally favorable, there are signs of slippage in some categories in recent periods, such as with respect to governance and infrastructure. This result is confirmed by both survey-based and NLP-based indicators. We also find that our NLP-based indicators would suggest that perceptions of Canada’s investment climate are similar to perceptions of U.S. investment climate, except with respect to governance, where views of U.S. governance are notably more negative. Comparing our novel indicator relative to traditional survey-based indicators, we find that the NLP-based indicators are statistically significant in helping to predict investment flows, similar to survey-based measures. Meanwhile, the new NLP-based indicator offers insights into the nuances of data, allowing us to identify specific grievances. Finally, we construct a similar indicator for the U.S. and compare trends across countries.
Keywords:
Investment Climate; Canada; Machine Learning; Sentiment Analysis; muted productivity growth; investmest climate; investment flow; NLP-based indicator; Climate finance; Competition; Infrastructure; Productivity; Mining sector; Global
Cover IMF Working Papers
Climate Policies and External Adjustment
Rudolfs Bems
,
Luciana Juvenal
,
Weifeng Liu
, and
Warwick J. McKibbin
This paper assesses the economic effects of climate policies on different regions and countries with a focus on external adjustment. The paper finds that various climate policies could have substantially different impacts on external balances over the next decade. A credible and globally coordinated carbon tax would decrease current account balances in greener advanced economies and increase current accounts in more fossil-fuel-dependent regions, reflecting a disproportionate decline in investment for the latter group. Green supply-side policies—green subsidy and infrastructure investment—would increase investment and saving but would have a more muted external sector impact because of the constrained pace of expansion for renewables or the symmetry of the infrastructure boost. Country characteristics, such as initial carbon intensity and net fossil fuel exports, ultimately determine the current account responses. For the global economy, a coordinated climate change mitigation policy package would shift capital towards advanced economies. Following an initial rise, the global interest rates would fall over time with increases in the carbon tax. These external sector effects, however, depend crucially on the degree of international policy coordination and credibility.
Keywords:
Global climate policies; carbon tax; net-zero emissions; current account balances; international capital flows; dynamic general equilibrium modelling; G-Cubed; climate change mitigation policy package; current account response; IMF working paper 24/162; infrastructure investment; investment response; Current account; Greenhouse gas emissions; Productivity; Global; Europe
Cover IMF Working Papers
Hanging Out to Dry? Long-term Macroeconomic Effects of Drought in Fragile and Conflict-Affected States
Kalin I Tintchev
and
Laura Jaramillo
Using a comprehensive drought measure and a panel autoregressive distributed lag model, the paper finds that worsening drought conditions can result in long-term scarring of real GDP per capita growth and affect long-term price stability in Fragile and Conflict-Affected States (FCS), more so than in other countries, leaving them further behind. Lower crop productivity and slower investment are key channels through which drought impacts economic growth in FCS. In a high emissions scenario, drought conditions will cut 0.4 percentage points of FCS’ growth of real GDP per capita every year over the next 40 years and increase average inflation by 2 percentage points. Drought will also increase hunger in FCS, from alreay high levels. The confluence of lower food production and higher prices in a high emissions scenario would push 50 million more people in FCS into hunger. The macroeconomic effects of drought in FCS countries are amplified by their low copying capacity due to high public debt, low social spending, insufficient trade openness, high water insecurity, and weak governance.
Keywords:
climate change; long-term growth and inflation; climate policy; drought condition; FCS country; FCS group specification; drought measure; FCS' growth; Natural disasters; Food production; Productivity; Global; Sub-Saharan Africa
Cover IMF Staff Country Reports
Peru: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
The Selected Issues paper focuses on productivity and growth in Peru. Firms have maintained smaller sizes to avoid the application of a profit-sharing legislation, which has resulted in lower productivity. After a decade of high economic growth averaging over 6 percent per year, potential growth has been falling since 2014. A much slower pace of investment and human has driven the decline capital accumulation, but most notably, a decline in total factor productivity growth. In line with the macroeconomic trends, firm-level productivity has worsened, and the decline has been broad-based across the economy. Special corporate tax regimes and labor legislations and regulations have created barriers to productivity growth. To raise productivity, policies will need to focus on reforming regulations that impose excessive costs to formalizing or growing a business. Down the line, introducing greater labor market flexibility would ensure that workers could transition to productive sectors of the economy and reduce labor informality.
Keywords:
El Niño shock; building RESILIENCE; B. Measuring productivity; B. artificial intelligence; total factor productivity growth; labor force complementarity; Climate change; Natural disasters; Productivity; Potential output; Artificial intelligence; Global; Caribbean
Cover Policy Papers
Development Committee: The Managing Director's Written Statement April 2024
International Monetary Fund. Strategy, Policy, & Review Department
The global economy has been resilient and appears headed for a soft landing. Inflation continues to recede and risks have become more balanced globally. Nonetheless, medium-term growth prospects remain at the lowest level in decades and a smooth completion of the disinflation process should not be taken for granted. While the outlook for low-income developing countries (LIDCs) is improving, risks are tilted to the downside. The pace of convergence toward higher living standards has slowed, making it increasingly challenging to achieve the Sustainable Development Goals (SDGs). In the last mile of disinflation, central banks should ensure that inflation moves durably to target: they should neither ease policies prematurely nor delay too long and risk causing target undershoot. Fiscal policies need to rebuild budgetary room and ensure debt sustainability. Fostering faster productivity growth and facilitating the green transition are keys to improving long-term growth prospects. Multilateral cooperation is key to enhancing the resilience of the global economy in a more shock-prone world.
Keywords:
inflation move; disinflation process; lending capacity; IMF surveillance; concessional facilities; Inflation; Climate finance; Climate change; Sustainable Development Goals (SDG); Disinflation; Global
Cover IMF Staff Country Reports
Republic of North Macedonia: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper focuses on challenges and policies regarding climate change in the Republic of North Macedonia. A scale-up of private and public investments, along with decommission of old and polluting coal-based power plants, is needed to adapt to climate change and meet emissions targets as part of the green transition. The EU-Carbon Border Adjustment Mechanism (EU-CBAM) from 2026 will affect North Macedonia, and the authorities should consider a gradual introduction of carbon taxation to prepare for the EU-CBAM, as also envisioned in existing legislation. The introduction of the EU CBAM will influence North Macedonia’s exports to the EU negatively, as well as revenue collected, as part of the EU CBAM will be foregone revenue for North Macedonia. Instead, North Macedonia should consider a form of carbon taxation, as also envisioned in existing legislation, to collect the revenue by the state, as well as recycle part of this to mitigate the impact of the carbon tax and further support the green transition.
Keywords:
interest rate pass-through; long term interest rates pass-through; interest rate transmission; climate policy agenda; productivity competition; Total factor productivity; Productivity; Central bank policy rate; Climate change; Electricity; Europe; Global
Cover IMF Working Papers
Global Economic Impacts of Physical Climate Risks
Caterina Lepore
and
Roshen Fernando
This paper evaluates the global economic consequences of physical climate risks under two Shared Socioeconomic Pathways (SSP 1-2.6 and SSP 2-4.5) using firm-level evidence. Firstly, we estimate the historical sectoral productivity changes from chronic climate risks (gradual changes in temperature and precipitation) and extreme climate conditions (representative of heatwaves, coldwaves, droughts, and floods). Secondly, we produce forward-looking sectoral productivity changes for a global multisectoral sample of firms. For floods, these estimates account for the persistent productivity changes from the damage to firms’ physical capital. Thirdly, we assess the macroeconomic impact of these shocks within the global, multisectoral, intertemporal general equilibrium model: G-Cubed. The results indicate that, in the absence of additional adaptation relative to that already achieved by 2020, all the economies would experience substantial losses under the two climate scenarios and the losses would increase with global warming. The results can be useful for policymakers and practitioners interested in conducting climate risk analysis.
Keywords:
climate risk analysis; capital markets department; climate risk; physical capital; productivity change; Climate change; Productivity; Agricultural sector; Natural disasters; Global; North America; Western Europe; Europe