Christoph Albert, Paula Bustos, Jacopo Ponticelli, 26 November 2021

There are still significant gaps in our understanding of how climate change affects economic outcomes. This column uses new data on extreme weather events in Brazil to study their impact on labour and capital reallocation across regions, sectors, and firms. Long periods of excess dryness lead to the reallocation of capital and labour away from affected regions. Excess dryness over the last two decades has also changed the structure of the economy – not only in directly affected areas, but also in regions that were integrated with them via labour and capital markets.

Khalid ElFayoumi, Martina Hengge, 14 September 2020

The COVID-19 pandemic and associated policy responses triggered a historically large wave of capital reallocation between markets, asset classes, and industries. This column uses high-frequency data to show that capital market dynamics were not exclusively driven by undiscriminating global factors. Instead, the degree of the spread of the virus, the stringency of the lockdown, and the fiscal policy response played key roles in explaining the wide heterogeneity in international portfolio flows across countries, particularly for emerging markets.

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