Sustainable Macroeconomics, Climate Risks and Energy Transitions

Reviews / Votes

The book is a remarkable contribution to macroeconomics in a landscape of scientific literature that has so far kept its focus on written work dealing with the short and long-term sight. A medium-term contribution dealing with the path to greenhouse gas neutrality from a macroeconomic point of view fills an important gap.

-Ottmar Edenhofer, Director of the Potsdam Institute for Climate Impact Research and Professor at the Technical University, Berlin, Germany.

Energy security is at the top of the policy agenda. Nyambuu and Semmler present an innovative set of medium-run macro models [and numerical solution techniques] to analyze which policy levers can guarantee lasting energy security by accelerating the adoption of abundant green energy. The models developed here are more suited to understanding the energy transition than either the large-scale macro models or the long-run growth framework embedded in Integrated Assessment Models (IAM). Rich in data description as well asanalysis, this book can be used as a complement to traditional macroeconomics textbooks to deepen the discussion of climate change issues.

-Prakash Loungani, Assistant Director, IMF Independent Evaluation Office at International Monetary Fund Director of the MS Econ Program, Johns Hopkins University

Pledges to keep global warming below devastating tipping points, like the Paris Agreement or COP21, are long-term, ranging over decades. They are promises, prone not to be honored. For essentially political-economic reasons, facing up to short-term challenges - "keeping the lights on" - regularly prevails. Inexorably, this set-up increases the social costs of addressing climate change. Short-termism, heavily discounting consequences further down the road, is a major roadblock, preventing our societies to stay within the rapidly exhausting "carbon budget". In their analyses, comprehensive in scope and innovative in tools deployed, Unurjargal Nyambuu and Willi Semmler, twooutstanding experts in the field, demonstrate convincingly that it is of the essence to account for the short- and medium-term, that is, the path towards the long-term goal. Essentially, this bears down to acknowledging the pertinence of macroeconomic background conditions against which policies to address the risks of climate change are implemented. Unurjargal Nyambuu and Willi Semmler's most instructive and innovative book pushes the economics of climate change significantly beyond the limits of the prevailing growth-theory-oriented approaches. At the same time, and this is crucial, their analyses are practical and applicable - no fearmongering but constructive, solution-oriented proposals.

-Hans-Helmut Kotz, Resident Fellow, Center for European Studies, Harvard University, former Member of the Executive Board of Deutsche Bundesbank.

Recent crises have evidenced how little standard economic thinking can contribute to real World challenges. While the economic theory is already evolving, its application is lacking behind. Institutions such as the World Bank have also some learning to do, as for example can be seen in its flagship report "Global Economic Prospects" where climate risk is hardly mentioned. This impressive book comes at the right time when shareholders are asking for an overhaul of Multilateral Development Banks' business model (taking into account global challenges and planetary boundaries).

-Jürgen Sattler, Former Executive Director of the World Bank Group, Director General at the German Ministry for Economic Cooperation and Development - in charge of multilateral institutions, environment/climate, and the SDGs.

In times in which the introduction of effective climate policies stalls while the climate crisis is becoming ever more pressing this modern treatment of climate-related macroeconomics is highly welcome as a timely and important contribution. It is "modern" in that it leaves the well-trodden pathways of integrated assessment modeling based on a highly aggregative planner or perfectly competitive economies and embraces in a serious analytical way issues such as short-termism; strategic behaviour in imperfect resource, energy and technology markets; financial incentives; negotiations and tipping points; an understanding of all of which is crucial for effective policymaking in a decentralized and interest-ridden world.

-Michael Kuhn, Director of Economic Frontiers Program, International Institute for Applied Systems Analysis (IIASA), Laxenburg, Austri