Climate Finance: Taking a Position on Climate Futures
By: Gareth Bryant, Sophie Webber – University of Sydney
Climate change is increasingly contested on financial terms. Different actors are advancing competing climate visions and interests by adopting financial positions. International institutions urge action by identifying financing gaps needed to meet climate targets. The finance sector claims it holds the key to unlocking money needed for climate investment. Activists expose greenwashing while using financial tactics to undermine fossil fuels. Vulnerable countries demand wealthy governments repay historical climate debts.
This book offers an accessible and critical guide to the political economy and economic geography of climate finance. It identifies six competing “positions” of climate finance to make sense of the array of financial instruments, institutions and ideas that are remaking the relationship between capitalism and climate change. Using a wide range of case studies, from green bonds, to divestment, carbon offsetting, climate tech, central banks, and international climate funds, the authors show how climate finance is shaping our collective climate futures.
The Price is Wrong: Why Capitalism Won’t Save the Planet
By: Brett Christophers – Uppsala University
What if our understanding of capitalism and climate is back to front? What if the problem is not that transitioning to renewables is too expensive, but that saving the planet is not sufficiently profitable?
This is Brett Christophers’ claim. The global economy is moving too slowly toward sustainability because the return on green investment is too low.
Today’s consensus is that the key to curbing climate change is to produce green electricity and electrify everything possible. The main economic barrier in that project has seemingly been removed. But while prices of solar and wind power have tumbled, the golden era of renewables has yet to materialize.
The problem is that investment is driven by profit, not price, and operating solar and wind farms remains a marginal business, dependent everywhere on the state’s financial support. We cannot expect markets and the private sector to solve the climate crisis while the profits that are their lifeblood remain unappetizing. But there is an alternative to providing surrogate green profits through subsidies: to take energy out of the private sector’s hands.
Getting Monetary Policy Back on Track
By: Michael D. Bordo, John H. Cochrane, John B. Taylor – Rutgers University, Hoover Institution, Stanford University
In May 2023, the world’s top economic policymakers and academics convened at the Hoover Institution for the annual Monetary Policy Conference. They met at a tumultuous time: the previous year, inflation had surged, and some believed the Federal Reserve was slow to react. What was behind this surge, and why did the Fed fail to forecast inflation, or perceive it when it happened? Participants considered whether the sluggish response made the situation worse, and how to get inflation back under control.
This volume presents the full proceedings from this conference—the presentations, responses, and discussions. In it, participants debate the meaning of getting monetary policy “back on track,” the significance of recent bank failures, and how to improve forecasting and oversight. A persistent underlying question is whether the Fed should follow a rule-like monetary policy, which maintains predictability in response to fluctuating inflation, GDP, and employment rates. Presenters discuss this issue as they recognize the thirtieth anniversary of the Taylor rule, an important guide to practical monetary policy.
Other topics include a five-century history of central bank balance sheets, inflation targeting in Japan, and lessons from Latin America. Together, these proceedings illustrate and dissect the interaction of financial regulation and monetary policy.
The Adaptive Markets Hypothesis – An Evolutionary Approach to Understanding Financial System Dynamics
By: Andrew W. Lo, Ruixun Zhang – MIT, Peking University
The Adaptive Markets Hypothesis (AMH) presents a formal and systematic exposition of a new narrative about financial markets that reconciles rational investor behaviour with periods of temporary financial insanity. In this narrative, intelligent but fallible investors learn from and adapt to randomly shifting environments. Financial markets may not always be efficient, but they are highly competitive, innovative, and adaptive, varying in their degree of efficiency as investor populations and the financial landscape change over time.
Andrew Lo and Ruixun Zhang develop the mathematical foundations of the AMH–a simple yet surprisingly powerful set of evolutionary models of behavior–and then apply these foundations to show how the most fundamental economic behaviors that we take for granted can arise solely through natural selection. Drawing on recent advances in cognitive neuroscience and artificial intelligence, the book also explores how our brain affects economic and financial decision making. The AMH can be applied in many contexts, ranging from designing trading strategies, to managing risk and understanding financial crises, to formulating macroprudential policies to promote financial stability.
