The climate and the fat tail risk

Michael Roberts Blog

Last month at the gathering of the great but not good, the rich and infamous, at the World Economic Forum in Davos, US Treasury secretary, Steven Mnuchin, formerly a hedge fund manager, was asked whether he agreed that calls by teenage climate activist Greta Thunberg for public and private-sector divestment from fossil fuel companies would threaten US growth.  He said it would and Mnuchin jibed: “Is she the chief economist? Who is she, I’m confused… After she goes and studies economics in college she can come back and explain that to us.”  Thunberg retorted: “My gap year ends in August, but it doesn’t take a college degree in economics to realise that our remaining 1,5° carbon budget and ongoing fossil fuel subsidies and investments don’t add up.”

Thunberg may not be an economist (which may be to her advantage), but the economics of global warming and climate…

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