Transition Risks in the Fed’s Second District and the Nation

Kristian Blickle, Rajashri Chakrabarti and Maxim Pinkovskiy

No 20231109, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Climate change may pose two types of risk to the economy—from policies and consumer preferences as the energy system transitions to a lower dependence on carbon (in other words, transition risks) or from damages stemming from the direct impacts of climate change (physical risks). In this post, we follow up on our previous post that studied the exposure of the Federal Reserve’s Second District to physical risks by considering how transition risks affect different parts of the District and how they differentially affect the District relative to the nation. We find that, relative to other regions of the U.S., the economy of the Second District has considerably less exposure to fossil fuels. However, the cost of reducing even this relatively low economic dependence on carbon is still likely to be considerable.

Keywords: Second District; climate change; transition risks (search for similar items in EconPapers)
JEL-codes: E24 Q54 R10 (search for similar items in EconPapers)
Date: 2023-11-09
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