Climate Finance

This graduate course will develop both models and empirical methods that are necessary to assess the role of the financial system in addressing the risks of global warming.  The course will take a continuous-time approach and feature financial markets that provide crucial information on expectations and plans of economic agents regarding climate change.  After a primer on continuous time methods and stochastic growth models, we will cover a number of topics including: an asset pricing approach to integrated assessment models, pricing natural capital such as tropical rain forecasts, mitigation of weather disaster risks that are becoming more frequent with global warming, sustainable finance mandates in fostering the transition of the industrial sector to net-zero emissions, corporate adaptation strategies to heatwaves, and integrating climate tipping points and financial frictions into assessments.