Work in progress
'Optimal climate policy as if the transition matters' (with S. Dietz and F. Venmans) Working paper R&R at Review of Economic Studies
The optimal transition to a low-carbon economy must account for adjustment costs in switching from dirty to clean capital, technological progress, and economic and climatic shocks. We study the low-carbon transition using a dynamic stochastic general equilibrium model with emissions abatement costs calibrated on a large energy modelling database, solved with recursive methods. We show how capital inertia puts upward pressure on emissions and temperatures in the short run, but that nonetheless it is optimal to actively disinvest from -- to `strand' -- a significant share of the dirty capital stock. Conversely, clean technological progress, as well as uncertainty about climatic and economic factors, lead to lower emissions and temperatures in the long run. Putting these factors together, we estimate a net premium of 33% on the optimal carbon price today relative to a `straw man' model with perfect capital mobility, fixed abatement costs and no uncertainty.
'Warning words in a warming world: Central bank communication and climate change' (with D. Romelli, J. Deyris and G. Scalisi) Working paper Conditionally accepted at European Economic Review
We study climate-related central bank communication using a novel dataset containing 35,343 speeches from 131 central banks over the 1986-2023 period. We employ natural language processing techniques to identify and trace the evolution of key climate-related narratives centred around `green finance' and `climate-related financial risks' themes. We find central bank public communication strategies to be primarily driven by underlying institutional factors, rather than exposure to climate-related risks. We then study the impact of climate-related communication on financial market dynamics through both a portfolio and a firm-level analysis. We find that equity returns of 'green' firms outperform those of 'dirty' firms when central banks engage more frequently and intensely with climate-related topics. This effect is stronger when the dominant narrative revolves around climate-related financial risks.
CBS Dataset (open access); Centralbanking.com; E-axes Forum Digest; The Conversation (France)
'Macroeconomic Transition Risks in a Hybrid Agent-Based Integrated Assessment Model' (with L. Fierro, S. Reissl, F. Lamperti, L. Drouet, J. Emmerling, E. Kremer and M. Tavoni) Working paper
Although the case for a swift climate transition is clear, its macro-financial viability remains uncertain. To shed light on the macroeconomic and financial response to deep mitigation trajectories controlled by carbon pricing, we integrate a process-based integrated assessment model into a macroeconomic agent-based model. The hybrid framework allows translating energy systems transformations into macro-financial outcomes at business cycle frequency and volatility. The results reveal that rapid transitions induced by fast-growing carbon prices significantly impact unemployment, inflation, and income distribution. Stabilization policies reduce these economic fluctuations, though not completely so in 1.5°C compatible scenarios. Our paper emphasizes the need for coordinating climate and macroeconomic policy during decarbonization. Additionally, it showcases how model integration can lead to a better understanding of the economic implications of low-carbon futures.
'The network effects of carbon pricing' (with H. Massoni and S. Trsek)
We develop a macroeconomic model to study how carbon pricing initiatives could affect the global economy via international production networks. Using sector- and country-specific data, we estimate the impact of three policies: (i) a global uniform tax; (ii) an EU-only tax; and (iii) an EU-only tax combined with a carbon border adjustment mechanism. Our results show that the distribution of tax-induced socioeconomic losses across sectors and countries critically depends on their relative position within global value chains. Negative impacts triggered by demand shocks in downstream sectors (and propagating upstream) appear to be stronger than that of direct taxation. We also find carbon pricing policies to reconfigure the structure of the international production network, with some countries/sectors becoming more marginal and others more central. Marginalisation on the intermediate input market is salient for countries imposing unilateral carbon policies.
'Speculation and policy credibility in the EU Emissions Trading System' (with S. Reissl and R. Terranova)
We develop a dynamic behavioural model of the EU Emissions Trading Scheme (ETS) to explore the impact of speculation and its interplay with policy credibility on the permit price and emission dynamics. We find that the presence of speculators in permit markets significantly influences the price, with speculators exerting upward pressure on the price trajectory, resulting in lower emissions and increased abatement costs, and increasing short-term fluctuations in the price. Further, both firms' hedging and speculators' trading delay the zero emissions date. In addition, we show that both positive and negative shocks to the credibility of the system have a strong effect on the permit price, and thereby also alter the dynamics of emissions. Finally, we study two potential reforms to the Market Stability Reserve (MSR) and show that allowing the MSR to repurchase already circulating permits allows the policy-maker to gain control of the date at which zero emissions are reached.
'Guardians of the regime: The dual role of finance in socio-technical transition' (with J. Deyris, F. Geels and C. Schroeder)
Transitioning to a carbon-free economy will involve two intertwined dynamics: the phase-in of low-carbon niches and the phase-out of incumbent high-carbon sectors. Correspondingly, effective climate change mitigation implies both the greening of new investments and the early retirement (or ‘stranding’) of incumbent high-carbon assets. Finance plays a key role in both dynamics, determining the pace and smoothness of phase-ins and phase-outs. However, it is still unclear (i) whether financial systems are currently ‘fit for purpose’; (ii) which transformation they might have to go through to support an orderly transition; (iii) and how this transformation should come about. Building on the socio-technical transitions literature and on the insights from a set of interviews with European central bankers, regulators, financial actors and energy incumbents and other primary sources, we investigate the policy and feedback effects that can shape the co-evolutionary dynamics between the finance and energy regimes throughout the low-carbon transition. Our results will shed light on the role that central banks can assume to accommodate a smooth low-carbon transition of the financial regime.
'Navigating electoral cycles and investment dynamics under climate policy uncertainty' (with R. Fei, F. Lamperti and R. Terranova)
'Transition expectations and policy uncertainty: an experimental approach' (with M.A. Erazo Diaz, F. Lamperti and R. Terranova)
'Climate financial bubbles: How market sentiments shape the transition to low-carbon capital stock' (with A. Godin and E. Kemp-Benedict) 2017 Draft
Peer-reviewed articles
Campiglio, E., De Angelis. L., Neri, L., Scalisi, G. (2025) 'From climate chat to climate shock: non-linear impact of transition risk in energy CDS markets'. Environmetrics 36 (e70012). Link to article (open access)
Campiglio, E., Spiganti, A., Wiskich, A. (2024) 'Clean innovation, heterogeneous financing constraints, and the optimal climate policy mix'. Journal of Environmental Economics and Management 128 (103071). Link to article (open access) - Replication package
Campiglio, E., Lamperti, F., Terranova, R. (2024) 'Believe me when I say green! Heterogeneous expectations and climate policy uncertainty'. Journal of Economic Dynamics and Control 165 (104900). Link to article (open access) - Replication package
Cahen-Fourot, L., Campiglio, E., Daumas, L., Miess, M., Yardley, A. (2023) 'Stranding ahoy? Heterogeneous transition beliefs and capital investment choices'. Journal of Economic Behavior & Organization 216, 535-567. Link to article (open access) - Replication package
Campiglio, E., Daumas, L., Monnin, P. von Jagow, A. (2022) 'Climate-related risks in financial assets'. Journal of Economic Surveys 37(3), 950-992. Link to article (open access)
Campiglio, E., van der Ploeg, F. (2022) 'Macrofinancial risks of the transition to a low-carbon economy'. Review of Environmental Economics and Policy 16(2), 173-195. Link to article Paper PDF
Ringsmuth, A.K., Otto, I.M., van den Hurk, B., Lahn, G., Reyer, C.P.O., Carter, T.R., Magnuszewski, P., Monasterolo, I., Aerts, J.C.J.H., Benzie, M., Campiglio, E., Fronzek, S., Gaupp, F., Jarzabek, L., Klein, R.J.T., Knaepen, H., Mechler, R., Mysiak, J., Sillmann, J., Stuparu, D., West, C. (2022) 'Lessons from COVID-19 for managing transboundary climate risks and building resilience', Climate Risk Management 35, 100395. Link to article (open access)
West, C.D., Stokeld, E., Campiglio, E., Croft, S., Detges, A., Duranovic, A., von Jagow, A., Jarząbek, Ł, König, C., Knaepen, H., Magnuszewski, P., Monasterolo, I., Reyer, C.P.O. (2021) 'Europe's cross-border trade, human security and financial connections: A climate risk perspective', Climate Risk Management 34, 100382. Link to article (open access)
Cahen-Fourot, L., Campiglio, E., Godin, A., Kemp-Benedict, E., Trsek, S. (2021) 'Capital stranding cascades: The impact of decarbonisation on productive asset utilisation', Energy Economics 103, 105581. Link to article (open access)
Baer, M., Campiglio, E., Deyris, J. (2021) 'It takes two to dance: Institutional dynamics and climate-related financial policies', Ecological Economics 190, 107210. Link to article (open access)
Carter, T.R., Benzie, M., Campiglio, E., Carlsen, H., Fronzek, S., Hildén, M., Reyer, C.P.O., West, C. (2021) 'A conceptual framework for cross-border impacts of climate change', Global Environmental Change 69, 102307. Link to article (open access)
Semieniuk, G., Campiglio, E., Mercure, J.F., Volz, U., and Edwards, N. (2021) 'Low-carbon transition risks for finance', WIREs Climate Change, 12(1). Link to article (open access)
Cahen-Fourot, L., Campiglio, E., Dawkins, E., Godin, A., Kemp-Benedict, E. (2020) 'Looking for the Inverted Pyramid: An Application Using Input-Output Networks', Ecological Economics 169, 106554. Link to article
Campiglio, E., Dafermos, Y., Monnin, P., Ryan-Collins, J, Schotten, G. and Tanaka, M. (2018) 'Climate change challenges for central banks and financial regulators', Nature Climate Change, 8, 462-468. Link to article
Bowen, A., Campiglio, E., Herreras Martinez, S. (2017) ‘An 'equal effort' approach to assessing the North-South climate finance gap’, Climate Policy, 17 (2), pp. 231-245. Link to article Working paper
Campiglio, E. (2016) ‘Beyond carbon pricing: The role of banking and monetary policies in financing the transition to a low-carbon economy’, Ecological Economics, 121, pp.220-230. Link to article Working paper
Tavoni, M., Kriegler, E., Riahi, K., van Vuuren, D.P., Aboumahboub, T., Bowen, A., Calvin, K., Campiglio, E., Kober, T., Jewell, J., Luderer, G., Marangoni, G., McCollum, D., van Sluisveld, M., Zimmer, A., and van der Zwaan, B. (2015) ‘Post-2020 climate agreements in the major economies assessed in the light of global models’, Nature Climate Change, 5 (2), pp.119-126. Link to article
Campiglio, E. (2014) ‘The structural shift to green services: A two-sector growth model with public capital and open-access resources’, Structural Change and Economic Dynamics, 30, pp.148-161. Link to article Working paper
Bowen, A., Campiglio, E., and Tavoni, M. (2014) ‘A macroeconomic perspective on climate change mitigation: Meeting the financing challenge’, Climate Change Economics, 5 (1). Link to article Working paper
Bernardo, G. and Campiglio, E. (2014) ‘A simple model of income, aggregate demand and the process of credit creation by private banks’, Empirica, 41 (3), pp.381-405. Link to article Working paper
Bonatti, L., Campiglio, E. (2013) ‘How can transportation policies affect growth? A theoretical analysis of the long-term effects of alternative mobility systems’, Economic Modelling, 31, pp.528-540. Link to article Working paper
Book chapters
Campiglio, E. (2019) ‘Financial regulators and sustainable development’, in Chiappero, E. (Ed.) The rules of Utopia, Fondazione Giangiacomo Feltrinelli, Milano, pp. 109-125 Chapter
Campiglio, E., Cahen-Fourot, L. and Monasterolo, I. (2018) ‘Finance and sustainability’ in Lutter, S., Luks, F., Stagl, S. (Eds.), Towards a Socio-Ecological Transformation of the Economy, Background Report for “Growth in Transition”, Vienna, pp. 49-59 Chapter
Campiglio, E., Godin, A., Kemp-Benedict, E. and Matikainen, S. (2017) 'The tightening links between financial systems and environmental issues', in Arestis, P., and Sawyer, M., Economic policies since the Global Financial Crisis, Palgrave Macmillan, London, pp. 313-356 Chapter
Books
Campiglio, E. (2013) 'Green Economy' (Original title: 'Sai cos’è la green economy?'), 50pp., Bruno Mondadori, Milano. [Link]
Campiglio, E. (2012) 'The good economy' (Original title: 'L’economia buona'), 172 pp., Bruno Mondadori, Milano. [Link]
Campiglio, E. (2010) 'With the world on shoulders: Global issues and limits to growth' (Original title: 'Con il mondo sulle spalle. Questioni globali e limiti alla crescita'), 180 pp., OMP Editore, Pavia. [Downloadable]
Other publications
Espagne, E., Oman, W., Mercure, J-F., Pollitt, H., Svartzman, R., Volz, U., Semieniuk, G., and Campiglio, E. (2023) 'Cross-border risks of a global economy in mid-transition', IMF Working Paper No. 2023/184, International Monetary Fund, Washington D.C. Link
Campiglio, E. Lamperti, F. (2022) 'Sustainable finance policy-making: Why and how', European Economy: Banks, Regulation and the Real Sector, 2021.2, Link
Van den Hurk, B., Otto, I. et al. (2020) ‘What can COVID-19 teach us about preparing for climate risks in Europe?’, Policy Brief, CASCADES and RECEIPT Link
Campiglio, E. (2020) 'Low-carbon macro-financial transitions: What could go wrong?', EAERE Magazine, n.10 Link
Dollman, R., Vannicelli, G., Eis J., Campiglio, E. (2020) ‘Low-carbon transitions and systemic risk’, Vivid Economics, March 2020 Download
Campiglio, E., Gnan, E. and Monasterolo, I. (2018) 'Green finance, regulation and monetary policy', Conference report, Oesterreichische Nationalbank. Download
Matikainen, S., Campiglio, E. and Zenghelis, D. (2017) 'The climate impact of quantitative easing', Policy Paper, Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science Download
Campiglio, E. (2012) 'Who should pay for climate? The effect of burden-sharing mechanisms on abatement policies and technological transfers', Grantham Research Institute Working Papers, 114 Download
Campiglio, E. (2012) 'The value of green' (Original title: 'Il valore del verde'), Per la Storia Mail, 54-55, p.13-18 Download