Climate Risk and Commodity Currencies
Vegard Larsen and
No 8788, CESifo Working Paper Series from CESifo
The positive relationship between real exchange rates and natural resource income is well understood and studied. However, climate change and the transition to a lower-carbon economy now challenges this relationship. We document this by proposing a novel news media-based measure of climate change transition risk and show that when such risk is high, major commodity currencies experience a persistent depreciation and the relationship between commodity price fluctuations and currencies tends to become weaker.
Keywords: exchange rates; climate; risk; commodities (search for similar items in EconPapers)
JEL-codes: C11 C53 D83 D84 E13 E31 E37 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env, nep-mac and nep-opm
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Working Paper: Climate Risk and Commodity Currencies (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8788
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