Description

 

Economic and financial crises have a devastating effect on economic growth, employment, and public deficits, resulting in a significant drop in the standard of living of most  industrialized countries. These effects can be especially negative for some countries of the European Monetary Union, especially for those with a sovereign debt crisis and serious economic problems of growth and unemployment in a background of rising public deficits and debt. In this situation, it seems natural to study the effects that different economic policies might have to encourage economic growth and employment using a modern macroeconomic analysis considering both rigidities in the labor market (especially in the Spanish economy) and large public deficits.

Climate change is also a defining challenge of our time. Our research team is actively addressing this issue by developing innovative methodologies aligned with the European Union's "Adaptation to Climate Change" mission, launched on September 2021. This mission aims to provide solutions for communities and assets facing climate impacts. Specifically, we focus on measuring and analyzing the impact of climate transition risks on financial markets. By understanding these risks associated with the shift to a zero-emissions economy, we can develop effective adaptation strategies for companies and entire sectors.

 

Our ongoing projects focus on:

 

(1) Macroeconomic Policy

• Macroeconomic policies to encourage growth and production
• Macroeconomic effect that fiscal and monetary policies have on employment.
• Dynamic Stochastic General Equilibrium with endogenous growth. We aim to improve endogenous growth models with the accumulation of human capital, with frictions in the work market and Taylor rules that explain the Monetary Authority’s behavior.

(2) Climate-Related Financial Risks: Greenness-at-Risk.

• Improved Quantification of Climate Transition Risk (CTR): We aim to enhance the measurement of CTR, taking into account the multifaceted nature of climate-induced risks, the principles of sustainability, and the fluctuating dynamics of financial markets. This enhanced quantification is the primary tool for understanding transition risk exposure and the appropriateness of potential risk mitigation approaches. In addition to policymakers, this is crucial for companies that must manage CTR to achieve long-term sustainability and profitability and for investors, increasingly concerned about sustainability, who must integrate CTR into their investment decisions.
• Innovation in Metrics and Evaluation Procedures: We intend to develop and refine metrics and methodologies for assessing how market participants perceive and evaluate efforts towards adaptation and transitioning to a zero-emissions economy, both at individual firm and industry levels.

 

(3) Macroeconomic Forecasting

• Formulation of econometric models to capture the relationship between monthly indicators and macroeconomic aggregates, on the basis of which forecasts are formulated for the activity and demand aggregate components of GDP and Gross Value Added.
• Preparation of the macroeconomic framework including short-run forecasts of the economy under study, ensuring consistency between the different dimensions of demand, income and production.
• Use of the macroeconomic framework as a tool for the evaluation of economic policies and the effects of different supply and demand shocks.
  

• Research Team  
• Publications
• Projects
• Partners and funding