Related papers: Sovereign Debt Default and Climate Risk
The importance of adequately modeling credit risk has once again been highlighted in the recent financial crisis. Defaults tend to cluster around times of economic stress due to poor macro-economic conditions, {\em but also} by directly…
Systemic risk in banking systems remains a crucial issue that it has not been completely understood. In our toy model, banks are exposed to two sources of risks, namely, market risk from their investments in assets external to the banking…
The implications of technological innovation for sustainability are becoming increasingly complex with information technology moving machines from being mere tools for production or objects of consumption to playing a role in economic…
With the increasing frequency of major natural disasters, understanding their political consequences is of paramount importance for democratic accountability. The existing literature is deeply divided, with some studies finding that voters…
In the context of whether investors are aware of carbon-related risks, it is often hypothesized that there may be a carbon premium in the value of stocks of firms, conferring an abnormal excess value to firms' shares as a form of…
Since the Industrial Revolution, the world economy has experienced rapid development, and China's economy has also achieved an unprecedented takeoff in the past. Behind the economic growth, population surge, and continuous improvement of…
With the onset of climate change and the increasing need for effective policies, a multilateral approach is needed to make an impact on the growing threats facing the environment. Through the use of systematic analysis by way of C-ROADS and…
The Paris Agreement, considered a significant milestone in climate negotiations, has faced challenges in effectively addressing climate change due to the unconditional nature of most Nationally Determined Contributions (NDCs). This has…
In a prior study, I introduced a simple economic growth model designed to be consistent with general thermodynamic laws. Unlike traditional economic models, civilization is viewed only as a well-mixed global whole with no distinction made…
In order to explore whether environmental liability insurance has an important impact on industrial emission reduction, this paper selects provincial (city) level panel data from 2010 to 2020 and constructs a two-way fixed effect model to…
This paper develops a two-dimensional structural framework for valuing credit default swaps and corporate bonds in the presence of default contagion. Modelling the values of related firms as correlated geometric Brownian motions with…
The scale and terms of aggregate borrowing in an economy depend on the manner in which wealth is distributed across potential creditors with heterogeneous beliefs about the future. This distribution evolves over time as uncertainty is…
Technical debt is a metaphor used to convey the idea that doing things in a "quick and dirty" way when designing and constructing a software leads to a situation where one incurs more and more deferred future expenses. Similarly to…
Changes in collateralization have been implicated in significant default (or near-default) events during the financial crisis, most notably with AIG. We have developed a framework for quantifying this effect based on moving between…
What happens to pollution when developing countries open their borders to trade? Theoretical predictions are ambiguous, and empirical evidence remains limited. We study the effects of the 1991 Indian trade liberalization reform on water…
Under the guidance of the dual-carbon target, the development of the carbon financial system is of great significance to compensate for the gap between green and low-carbon investment. Considering the current state of the development of…
In most of the recent literature on state capacity, the significance of wars in state-building assumes that threats from foreign countries generate common interests among domestic groups, leading to larger investments in state capacity.…
Recent antitrust regulations in several countries have granted exemptions for collusion aimed at achieving environmental goals. Firms can apply for exemptions if collusion helps to develop or to implement costly clean technology,…
Debt recycling is an aggressive equity extraction strategy that potentially permits faster repayment of a mortgage. While equity progressively builds up as the mortgage is repaid monthly, mortgage holders may obtain another loan they could…
The recent "correlation breakdown" in the modeling of credit default swaps, in which model correlations had to exceed 100% in order to reproduce market prices of supersenior tranches, is analyzed and argued to be a fundamental market…