FROM HELL TO HEAVEN: HOW CLIMATE RISKS HURT THE POOR AND CLIMATE FINANCE HEALS THEM

Kangyin Dong (), Congyu Zhao () and Xiucheng Dong ()
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Congyu Zhao: University of International Business and Economics, China
Xiucheng Dong: University of International Business and Economics, China

Bulletin of Monetary Economics and Banking, 2024, vol. 27, issue 4, 603-630

Abstract: This study explores the global impact of climate finance on wealth and income inequality, utilizing the IV-GMM model to capture nuanced relationships. Key findings indicate that climate finance effectively reduces both forms of inequality, benefiting low-income populations and suggesting it as a viable tool for inequality reduction. Notably, the impact of climate finance is asymmetric: countries with lower initial inequality levels experience more pronounced benefits, while the effect lessens as inequality increases. Additionally, climate risks—represented by natural disasters— worsen inequality, underscoring climate finance’s dual role in directly reducing inequality and indirectly mitigating disaster impacts. These insights offer valuable policy implications, highlighting climate finance as a means to promote equity and alleviate poverty in the face of escalating climate challenges.

Keywords: Climate finance; Climate risk; Nature disaster; Income inequality; Wealth inequality (search for similar items in EconPapers)
JEL-codes: C23 D63 F35 O15 Q54 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:27:y:2024:i:4b:p:603-630

DOI: 10.59091/2460-9196.2414

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