with Juan Pablo Medina and Rodrigo Palma-Behnke. Energies, 17(1), 179, 2024
Abstract: In the context of the imperative global shift towards renewable energy to mitigate climate change, Latin America (LATAM) emerges as a region of immense untapped potential. However, there is no formal quantification of the effects of developing this potential. This study analyzes the economic and climate impacts of developing renewable energy in LATAM and the Asia–Pacific region using an integrated economic and climate assessment model (IAM). The key findings are as follows. First, exporting renewable energy from LATAM and the Asia–Pacific region yields economic benefits across all regions. However, this surge in renewable energy exacerbates rather than alleviates global warming. Second, the implementation of policy measures accompanying renewable energy exports, aimed at discouraging the use of polluting energy sources, proves effective in mitigating global warming while sustaining significant economic gains globally. Third, LATAM stands to gain substantially from this development. Fourth, due to the gradual process of capital accumulation, any delays in initiating the development of renewable energy exports not only diminish economic gains during the postponement but also in the years following the commencement of exports. These results are robust to several additional simulations and sensitivity analyses. The results align with the goals of the Paris Agreement.
with Felipe Beltrán, Luigi Durand and Mario González. Latin American Journal of Central Banking, 100146, 2024
Abstract: The study of energy and climate has become of primary relevance for policymakers in central banks and other institutions. Current analyses for Chile suggest medium to strong direct physical effects, with some studies pointing to relatively higher impacts in the northern and central regions. Also, indirect effects, such as those originating from green transitions around the world, are likely to be significant. This paper provides a brief review of the effects that climate change may have on the economy and describes efforts made by the Central Bank of Chile to gain a better understanding of these effects. These efforts include: geo-referencing of assets and the primary physical risks they face, characterization of the transmission channels through which climate risks can propagate, a better estimation of the uncertainty of climatic events and the development of new general equilibrium models.
with Mauricio Calani and Marco Piña. 2025
Abstract: How important, for welfare, is the counter-cyclical capital buffer (CCyB) relative to other —higher and more permanent— bank capital requirements? While there is a better understanding of the effect of a-cyclical higher capital requirements on banks’ resilience and credit supply, much less is known about the marginal effects of introducing a macroprudential counter-cyclical capital requirement. In this paper, we study and rank the welfare gains of introducing several simple and implementable financial policy (CCyB) rules that co-exist with monetary policy. We find that the institutional design of the financial-policy instruments matters. In particular, a zero lower bound on the CCyB interacts with its counter-cyclical nature and provides a rationale for a positive neutral level. We build our analysis based on a quantitative macro-banking model with two main frictions; nominal rigidities and financial frictions, which we estimate for Chile.