Economics of Uncertainty and Disasters
Covers macroeconomic risks, rare events, and adaptive responses across disciplines.
Universidad Torcuato Di Tella
Unequal Climate Policy in an Unequal World
Elisa Belfiori
Federal Reserve Bank of Dallas
Geopolitical Oil Price Risk and Economic Fluctuations
Lutz Kilian
Monash University
Labor supply responses to rainfall shocks
Pushkar Maitra
International Monetary Fund
Changing Climate in Brazil: Key Vulnerabilities and Opportunities
Christina Kolerus
University of Gothenburg
Floods, droughts, and environmental circumscription in early state development
Ola Olsson
Overview
This theme investigates how economies respond to rare shocks — climate crises, geopolitical instability, and natural disasters — and how these disruptions reshape development, labor, and policy planning. Drawing on global research, the featured interviews explore both historical insights and forward-looking models for resilience, inequality, and environmental adaptation.
Why It Matters
- Rare Events, Real Costs: Floods, oil shocks, and rainfall volatility are no longer outliers — they are central macroeconomic drivers.
- Inequality Amplified: Climate and economic shocks disproportionately affect low-income populations, demanding redistributive strategies.
- Policy Foresight: Macroeconomic modeling must now account for environmental constraints and systemic uncertainty.
- Institutional Resilience: Adaptive capacity, both political and infrastructural, is the new currency of sustainable development.
Core Concepts
Regressive Impact of Carbon Taxes
- Examines the unequal burden of climate policy on low-income households.
- Analyzes redistributive potential and regressivity in environmental taxation.
Oil Market Volatility and Macro Fluctuations
- Explores how geopolitical risks influence global oil markets.
- Links energy shocks to broader macroeconomic instability.
Rural Labor and Rainfall Shocks
- Studies how rural labor markets in developing countries respond to unpredictable weather.
- Highlights income volatility and household adaptation strategies.
Climate Vulnerability and Green Transition
- Examines Brazil’s exposure to climate risks.
- Identifies pathways for green economic transformation in emerging economies.
Ancient Climate Shocks and Governance
- Analyzes historical weather shocks and their role in early state formation.
- Connects ancient environmental stressors to political centralization and territorial control.
Key Questions
Macroeconomic Fragility
- How should economic models integrate climate variability and geopolitical shocks?
- What does resilience look like in low- and middle-income economies?
Equity In Adaptation
- Are carbon taxes fair, and how can they be restructured to protect the vulnerable?
- What role should international institutions play in offsetting climate injustice?
Labor And Disasters
- How do households adapt to environmental income shocks?
- Can flexible labor markets compensate for ecological unpredictability?
History As Model
- What can early civilizations teach us about climate governance and survival?
- Are today’s disasters replaying ancient patterns in a modern key?
Suggested Use
For Economists And Policymakers
Use this guide to rethink fiscal design, labor policy, and climate mitigation strategies.
For Development Agencies
Frame resilience-building programs around historic and systemic vulnerabilities.
For Educators And Students
Ideal for courses on environmental economics, disaster risk, and global inequality.