 So, hi everyone, it's a great pleasure to meet you online and I very much look forward to meeting you at SOAS in person in September. My name is Jens de Fermos, I'm a Senior Lecturer in Economics at SOAS. I'm also the Director of Research in the Department of Economics and I'm the Convener of the MS Economics. Today I'm going to discuss with you macroeconomic policies and development finance in the era of the climate crisis. As you know, we are in a period whereby we are facing a lot of challenges and the climate crisis is one of these challenges. So for economists, a very important question is how we can transform macroeconomic policies and development finance in order to contribute to addressing the crisis in a just way. So what I'm going to do in this lecture is that I will first explain some broader issues about the climate crisis and the global economy. Then I will tend to describe some key macroeconomic policies that have been suggested or have been used in order to address the crisis. And after that, I would like to focus a little bit on what the climate crisis means for the global south and why we need to introduce climate justice in the way that we address the crisis. And finally, I will focus on development finance and how development finance is changing because of the climate crisis. So I have in the next slide, this figure which summarizes the problem that we have. This is from one of the reports of IPCC, the Governmental Panel on Climate Change. And this graph shows that over the last decades, we have seen an increase in the global atmospheric temperature. We are now close to one degree increase compared to what we had in the period between 1850 and the early 1900s. So we have increased the temperature of the earth. We know that this has been the case primarily because of the fact that we have generated so many greenhouse gas emissions. And the problem is that if we continue to consume and produce in the same way that we did in the past, it's very likely to see an increase in atmospheric temperature by the end of the century that will be close to three or four degrees. Now, there are several scenarios that IPCC has used in order to analyze what can happen in the future. So some scenarios generate three or four degrees, but there are also some scenarios that generate a lower increased atmospheric temperature. The problem is that right now we are very far from having scenarios like those that generate less than two degrees at the end of the century. And this means that it's very likely that in the next years, we are going to see that climate change is going to affect our economies and our societies even more. So in the next slide, I have a table that summarizes the economic effects of climate change. Now, economists in many cases make a distinction between demand side effects and supply side economic effects. So supply side economic effects have to do with the impact that climate change might have on the supply of labor, how many people can work under which conditions, how productive they are. And we know that because of climate change, there will be some negative effects on this. We know for instance that when we have extreme heat waves, people work less. We know that the increase in temperature can reduce productivity. We also know that there will be huge effects on migration, which of course has implications for labor supply. We also know that climate change affects in a very fundamental way productivity in the agricultural sector. So countries that rely a lot on this sector will suffer quite substantially. And this refers both to the fact that they need to export goods related with the agriculture, but also to the fact that these goods are important for the social reproduction in these countries. We also know that when we have events like hurricane storms, this has a negative impact on specific regions. We know for instance that capital stock properties are destroyed by climate related events. And the challenge is that in many cases, it's necessary to change the way that we develop our buildings in order to make them less vulnerable to climate change. And this means that we might need to invest a lot in what is called climate adaptation. This can reduce the availability of resources for doing other more productive types of investment. And finally, we also know that by having climate change, we will need to spend a lot of resources on dealing with this. In some cases, there might be some positive side effects on technological issues, but in other cases, it means that the technological progress might be undermined. So there will be a lot of supply side effects, but we also have demand side effects. We know for instance that investment demand can go down because if companies know that there is a region whereby climate related events become gradually more severe and more frequent, they might be less willing to invest there. So in a certainty related to investment goes up. We also know that in countries or regions whereby natural disasters are a kind of a norm, people tend to save more, so they consume less. And from a demand side perspective, this is not very good because it means that we have less sales of goods and services. And finally, we know that climate change can affect trade. It can affect the way that countries have imports and exports and it can disrupt supply chains quite substantially. So we have a lot of demand side, supply side effects. One thing that I would like to emphasize is that broadly speaking, if we look at countries in the global south, the supply side effects related for instance, to migration, to agriculture, might be more substantial compared to demand side effects. In the global north, we might see some significant effects related to trade and the demand for consumption and investment. Now, economists have not only analyzed these effects that I've just described, but they have also tried to find ways through which macroeconomic policies can be transformed in order to help us to reduce carbon emissions. So here I have some examples of some fiscal policies that have been suggested in order to address the crisis. The most standard fiscal policy that has been discussed in the context of the crisis is carbon taxes. The idea of the carbon taxes is that the government asked firms and households that generate emissions to pay for that. And the hope is that if households and firms have to pay for that, then they have an incentive to stop using positive hires and to start relying more on renewable energy to have more energy efficient buildings and so on. This is the idea of the carbon taxes. You might know, however, that when carbon taxes are reduced, this can have some side effects that can be quite substantial. So for example, companies might pass the cost of carbon tax on to prices. So we might have more inflation. And we know that in many cases, this type of inflation can affect people who are at the bottom of the distribution, poor people, more compared to rich people. So carbon tax can have some inequality effects. We also have policies related to with the so-called green subsidies. So green subsidies have to do, for instance, with this idea that companies and households don't have enough money to invest in green technologies and they don't have enough money to make their buildings more energy efficient. And in that case, the government can step in and provide part of the cost related to green investment. And green subsidies have been used in some countries, not so much compared to what is probably necessary. Of course, some economists argue that subsidies are a good way to support it as soon to allow carbon economy, but at the same time, they can also contribute to the increase in public debt. And we also have this policy of making public investment greener. This can mean, for instance, investment in green technologies. It can mean investment that has to do with transportation. So how can we, for instance, transform our cities in order to provide low-carbon transportation if it has to have a low-carbon transportation infrastructure that allows people to use public transport easily and without high costs? Or how can we change the way that the transmission grids are organized in the country in order to make them more efficient? Or how can we change the way that we provide energy to buildings? So governments can invest directly in these types of things and people have said that this is a crucial way through which we can address the climate crisis. But I would also like to draw your attention to some other types of policies that have been at the core of public debates recently, and they have to do with the federal banks and the financial system. To give you an example, here I have a paper that the Bank of England published last year. The Bank of England was asked by the UK government to incorporate climate change into the decision-making process. So last year, the government asked the Bank of England to take action in order to address climate change issues. And that's a response to this. What the Bank of England did was to identify ways through which the so-called quantitative easing QE program can become greener. You might know that quantitative easing programs have been used quite a lot over the last years by many central banks in order to support economic activity. And in the UK, we have seen the use of quantitative easing for this purpose. Now, one problem of quantitative easing is that many of the bonds that central banks buy when they conduct this program are related with fossil fuel companies. So central banks have supported fossil fuel companies through these programs. And some people have said that it is necessary to stop doing that. And it's necessary for central banks to invest more in bonds that have to do with the green economy. We have also seen recommendations related with financial regulation. So the question is how we can transform financial regulation in order to support the transition to a low-carbon economy. And many economists have said that one way to do that is to ask, for instance, banks to have higher capital. So capital refers to this money of banks that stems from their retained profits, for instance, and not from their liabilities. In order to make it clear that if banks provide loans to fossil fuel companies, they have to pay more. And we have the opposite if they provide loans related with the green economy. Now in many countries around the world, we have also seen this green credit guidance approach. For example, the Bank of Bangladesh has introduced this guidance and it has asked the commercial banks in the country to provide a specific proportion of their loans to climate friendly sectors and green activities. And by doing so, we have seen that the green loans in the country have increased. Finally, we have this overall proposal that development banks, investment banks need to have some more clear targets with respect to the way that they decide which projects they are going to finance. So in the past, many development banks have financed fossil fuel projects. And people have said that first of all, this has to stop. Second, it's necessary to use the capacity of these banks to provide loans in order to support specific low-carbon projects. So these are some ideas I have to do with the financial system and central banks. They have received a lot of attention primarily over the last two or three years. They were not discussed so much before. And now I would like to ask you your view to ask what you think about some of these policies. So if you could use the chat box in order to illustrate which of the four policies that I have on the slide, you think is the most effective in order to reduce carbon emissions, greenhouse gas emissions, that would be great. So here I have some of the policies that I've just described. I have carbon taxes. I have green public investment. I have what I said about quantitative easing, how to be carbonized quantitative easing. And finally, I have this broader suggestion about credit guidance and the use of development banking. So if you have to select between these three, sorry, four policies, what do you think is the best to add in order to reduce more quickly greenhouse gas emissions? So if you think that it is carbon taxes, just type one, if it is green public investment two, if it is the quantitative easing program which needs to be decarbonized, type three. And if it is credit guidance or green development banking, just type four. And of course, there's no wrong or right question because the discussion about these policies has been the subject of a lot of debates among economists and there are a lot of trade-offs involved in the way that these policies can be implemented. Okay, so great. We have already a few answers. I think Rebecca makes a good point that when we are talking about public investment, we can also link this with carbon taxes because for instance, we can have that carbon taxes increased and we use the revenues in order to invest in green projects. So this is what governments can do in practice. It seems that most of you are in favor of policy one, carbon taxes. But there are also a couple of you who believe that it's a good idea to rely on transforming development banking and having some credit guidance. But I would say that the majority of you are in favor of carbon taxes. Which makes sense. I mean, carbon taxes is a very direct policy to address the problem. As I said before, there are some trade-offs. Some of these can potentially be addressed depending on the way that green public investment, for instance, might be conducted. Or some people have said that we can have the so-called revenue recycling. So revenue recycling refers to this idea that we can use it as the revenues from carbon taxes. In particular, the government can use this revenues in order to provide more social transfers to people that might suffer from this. However, carbon taxes that are not over-conversated by other measures can increase inequalities quite substantially. So let me say now a few things about how macroeconomies have tried to analyze climate policies based on macroeconomic models. There is, first of all, this approach which is called cost-benefit analysis. So for example, many of you said that carbon taxes is probably the best way to reduce emissions quickly. Now, economists have used the cost-benefit analysis to analyze what is the so-called optimal value for a carbon tax. And one of these economists is William Northhouse. I don't know if you know him. He's an economist who got the Nobel Prize in economics four years ago. He developed one of the first models that analyzed the interactions between climate change and the economy. So he has influenced quite a lot the literature on climate economics. And the way that he has analyzed carbon pricing in his model is in line with the cost-benefit analysis. Let me explain a little bit the rationale behind the cost-benefit analysis. When we have that, companies have to pay for, because of a carbon tax, we have a cost. They have to spend more money related with climate mitigation. This is the cost in the cost-benefit analysis. But there is also a benefit. What is a benefit? The benefit is that if companies do that, if they pay for this and as a result of that, they spend more money on mitigating their emissions, climate damages in the next, the case will go down. So the benefit is that by doing this, we have less damages in the future that of course have a negative effect on the environment, but also on the economy. And what North House for instance has done is that he has compared the cost-benefits. And according to his approach, we need to have a carbon price that corresponds to this problem. Now, what is interesting is the following. If you look, I have here a graph which shows some of the results of the DICE model. The DICE model is the Dynamic Integrated Climate Economy Model of William North House. The model that basically got a Nobel Prize in Economics four years ago. And here we have the projections of this model for atmospheric temperature in the coming years. So recall that we are now close to one degree compared to what we had 200 years ago. And climate scientists have said that it would be best to avoid having an increase that is more than 1.5 or two degrees. And according to the analysis of North House, if we use the cost-benefit approach, what is the optimal temperature that we should have at the end of the century? You can see that here with this blue line, according to the cost-benefit analysis of North House, this is 3.5 degrees. And of course, this comes in contrast to what climate scientists say. So why do we get this 3.5 degrees? One of the reasons is that North House assumes that the damages from climate change on the economy will not be so substantial. And he has been criticized a lot because of that, of course. He also assumes that whenever we have climate depigation in place, the costs for firms are quite important. And this potentially does not take into account that whenever firms, for instance, invest in renewables, we have that overall economic effects might not be so bad as in the model of North House. So the reason why I'm saying this is because we cannot easily understand the implications of these types of analysis if we don't have a very good understanding of their assumptions. So the cost-benefit analysis is one way to do this. It has some advantages, but it also has some drawbacks. So some other economies have used what we can call a multi-criterial analysis. They don't necessarily use this very specific framework of cost and benefits, but what they do is that they compare different policy options like the options that I mentioned before. And for instance, they analyze how we can combine green public investment with carbon taxes, how we can combine public investment with a financial system that supports a green credit. And then they analyze the different trade-dots that we have to deal with related with the effects on employment, on inequality, and of course also on environmental impacts. So these analysis are not so deterministic compared to the cost-benefit analysis, but they take into account some broader factors. And before instance, as you did before, there are different views about which policies are the best ones. By using this multi-criterial analysis, we can understand which are the benefits and the disadvantages of different options. And it's also very important to understand who benefits and who loses from specific climate policies. Now, if you join us at SOAS next year, we are going to discuss this much more. You are going to learn about these specific types of approaches and you will understand better the details behind these analysis. But now I would like to say a few things about the importance of climate change for the global South. And the first thing that we have to highlight when we talk about climate change is that countries in the global North, like European Union countries, the USA, have the main responsibility for climate change. And why is that the case? It's very important when we talk about climate change to make a distinction between the emissions that we have every year. So let's say the emissions that we generate in 2022 and the emissions that have been generated in the past. The problem is that climate change basically depends on the cumulative emissions. So the history matters. And if we look at the history of emissions, we will very easily realize that countries in the EU and the United States have generated the vast majority of emissions. And in particular, the global North overall, I have here some data, has contributed to the 68% of cumulative emissions compared to 32% that is the case in the global South. I mean, the exact figures might differ a bit depending on how we define countries. But the big picture is that the cumulative emissions in the global North are much higher compared to cumulative emissions in the global South. And I would also like to emphasize that for when for instance we talk about China, China is right now the biggest emitter in terms of laws, but in terms of stocks, in terms of their contribution in the past, they have a much less contribution to the climate crisis. So the first thing is that the responsibility is different. But at the same time, we have that countries in the global South are much more affected and will be much more affected by climate change. So first of all, we know from climate scientists that the atmospheric temperature will be very different in different parts of the world. So when I refer to one degree or two degrees, I refer to the global mean atmospheric temperature, but there are significant differences between different regions. So we know from climate scientists that in the global South that the increase in temperature will be on average higher compared to the global North. And we also know if we look at the last 20 years or so, that developing countries have suffered much more from climate related events. So for instance, if you look at what has happened is more island developing states, they have suffered so much from climate related disasters, they will suffer more because of the increase in the sea level. And we also know that if we look for instance, the climate vulnerability in here, I have one of the indices that can be used in order to capture this. Based on the number of people who have lost their lives, but also based on the losses in terms of GDP, countries like Puerto Rico, Mozambique, Bangladesh, Pakistan are countries that have suffered more from this. So what do we have here? We have that on the one hand global South is less responsible for the climate crisis, but on the other hand it suffers a more from that. So this is a problem of climate justice that economists in many cases refer to, but very few things have been done in order to deal with this. So this is one big problem, but there is another one which has to do with the way that the global financial system works. What is this problem? When we have that the country suffers from high climate vulnerability, it means that overall financial investors are less willing to invest in this countries. And in practice, it means that for instance, the cost of borrowing for the public sector is higher. It means that it's more difficult for companies that are in this country to get access to finance. And overall the cost of getting finance in order to mitigate the effects of climate change in order to invest in what is called climate adaptation. Climate adaptation has to do with projects that allow the reduction of the negative effects of climate change in specific communities. So in many countries for instance, it's necessary for people to get protected from floods. So we need to have flood defenses. It might be necessary for people to move if they are very close to the sea and they need to go to other places. This requires investment, this requires money. And the global financial system is less willing to provide this money because the risks are higher for these countries. So we have the so-called climate public debt vicious cycle that you can see here on the slide. And this cycle suggests that high climate vulnerability leads to higher public debt and higher cost of borrowing. And when countries in the global south face higher public debt and higher cost of borrowing, they have less capacity to invest in climate adaptation. But if we have less investment in climate adaptation, the negative effects of climate change on economies and societies are even higher. The vulnerability increases and the financial system becomes even less willing to support the financing of climate adaptation and things become worse. And we have seen this in the past. The concern is that this vicious cycle will be enhanced in the coming years. So this is another issue that we also need to address. And now let me say a few things about the climate crisis and development finance. First of all, the fact that we have this climate injustice has been recognized in international discussions about how we can address the climate change problem. And here you can see that, for instance, the United Nations Framework Convention on Climate Change, which is related with the Paris Agreement, COP26, the Kyoto Protocol. They have said that it's necessary for developed countries to support financially developing countries in order to help them reduce emissions and address the problems of climate-related events. Now, a main problem is that, although we have seen these initiatives, if you look at the volume of climate finance, this is extremely low compared to what it should be the case. I mean, even based on the targets that UNFCC had a few years ago, we still haven't achieved what had been promised. So for instance, there was a target for 2020 of having climate finance equal to 100 billion US dollars. And we don't still have the data for 2020, but it's clear that we are below this target. So what have we seen over the last years? We have seen that climate finance has increased from about $52 million to close to $80 billion. And let me say that this finance can take different forms. It can be finance that is related with bilateral relations between countries. It can be, for instance, through multilateral development banks or through the private financial sector. The vast majority of this finance is considered to be from public sources. So we have seen a very small increase compared to what is necessary based on the climate crisis that we are facing. This is the first thing that we have to note. The second one is that if we look at public climate finance and we make a distinction between equity, grants and loans, the vast majority of this finance has come from loans. So you can see this here in the graph. So the red color corresponds to loans. So the highest proportion of this public climate finance is in the form of loans. Now equity and grants correspond to the case in which, for instance, we have that the countries are willing to make transfers to other countries. This can be in the form of grants. When you have a grant, you don't have to repay anything. So when a country in the global south receives the grant, then they don't have to pay it back. In the case of equity, we have that those that provide finance become shareholders so they can receive part of the benefits related to specific projects. Now the problem with loans is the following. Many of the countries in the global south are facing the problem of high public debts. This problem has been exacerbated recently because of the COVID-19 crisis. As you know, many countries had to increase their spending in order to protect their population, in order to provide some transfers because of the pandemic. And now their public debt is higher. The IMF, the National Monetary Fund and the World Bank have tried to support a little bit these countries by through some debt relief programs, but these programs had a very small effect on the overall public debt of the countries. So now it's more difficult because of the pandemic for the countries to get access to the national finance. And if climate finance takes the form of loans, it means that the public debt of these countries increases more and it makes things more difficult compared to the case in which for instance, these countries receive grants. So if we don't increase the proportion of grants compared to loans, we have the problem that in the medium run, this makes things probably worse. Another very significant aspect of climate finance is that the vast majority of projects that have been financed are related with climate mitigation. So we have this distinction between mitigation and adaptation. Climate mitigation refers to the fact that when we invest in specific projects, we can reduce the emissions. So when we have climate mitigation, the aim is to cause a reduction in greenhouse gas emissions and thereby to avoid further increases in atmospheric temperature. Climate adaptation, as I said before, refers to the case in which countries invest in projects that allow the population to be protected from the effects of climate change. Now, unfortunately, it's very difficult to avoid 1.5 or two degrees. So in these countries, it's necessary to invest in adaptation and it's necessary to do that because otherwise, the economic and social effects of climate change will be extremely severe. Now, if you look at this graph, you can see that the vast majority of finance is linked with mitigation. And this hasn't changed over the last years and I don't think that it's a very clear plan to change that in the coming years. So much more emphasis needs to be placed on that. On top of it, in the recent COP26, there was a lot of discussion about the support of countries in terms of climate losses and climate damages. Adaptation helped countries to adapt to the new reality of climate change, but it doesn't cover the fact that in many cases, there are significant financial losses that are linked with the disasters that come from climate change. And these financial losses need to be covered. And we don't have a very clear plan about how countries can be supported with respect to these losses and damages. So this is another significant limitation of this approach. Now, what I've just described has to do with the United Nations framework. And this is linked with the COP discussions that we had in the UK in the previous year. And this is linked with the way through which overall the community about climate change tries to deal with the fact that we have this climate injustice. Now, on top of it, we have recently seen some changes in development finance related to the policies of the World Bank. So the World Bank has this agenda which is called maximizing finance for development. The maximizes finance for development agenda was developed five, six years ago. And it has as a main premise that most developing countries cannot achieve their sustainable development goals based on their own fiscal resources. This is a case because they have high public debts. They have canvases that are not strong. They cannot get access to finance easily as countries in the global north. So they cannot rely on fiscal resources as it is a case in many countries in the global north. This is a starting point. And then what they say is the following. We have right now very big banks around the world. I'm talking about investment banks like BlackRock, JPMorgan, PIMCO, which have a lot of money from people who are rich, who are savers. And this money can be used according to this approach in order to support development in the global south. And the idea is that these banks just need to get to have the right incentives in order to invest there. And the governments in the global south need to provide these incentives. And based on this framework, there has recently been a discussion about the role of climate change. And the Gold Bank is happy to support investment in climate infrastructure projects that can't be the basis for developing what we call in finance an asset class. So climate can be an asset class in the sense that it can create some assets, financial assets that are backed up by these climate infrastructure projects that can be used in order for financial investors to make money. And the idea is that the World Bank can facilitate this process. So in reality, what does it mean? What does it mean? It means that the Gold Bank supports governments that are willing to develop specific projects in collaboration with the private sector and de-risk these projects in order to make them attractive for investors in the global north. How can governments de-risk climate projects? They can provide guarantees in the case of the projects don't go well. They can provide subsidies to the private sector. And by making these projects attractive from a returns and risk perspective, the hope is that then investors will be willing to use their money and support these projects. This is the idea behind the maximizing finance for development agenda. Now it has been criticized quite a lot just to mention a couple of reasons why we have this critique. First of all, the critique is that it doesn't take into account what I described before. It doesn't take into account that we have a climate justice problem. If the purpose of this agenda is to support financial investors by giving them higher returns and not to take into account that these financial investors in many cases have contributed to the crisis in the past because for instance, they have invested in positive skills. They are in countries that have produced most of the cumulative emissions. Then we are not dealing basically with the problem. We just have an approach that reinforces climate injustice. Second, what is happening in practice is that the governments first try to understand what private financial investors want and then they design the projects for their countries. We don't have that the projects are designed in a way that works for countries and then governments try to find finance is the other way around. And of course you can understand that in this process the interest of the financial investors might be at the core of this process because otherwise without this money kind of cannot invest. So these are two critiques but there is a very lively debate about that. Now I would like to conclude by saying that what I try to do in this lecture is just to introduce you to this area. There are so many important questions that the economists are dealing with right now. And many of these questions are addressed and are discussed quite extensively in our master's programs. So just to give you some examples, for instance, if you are interested in how climate change has been incorporated into macroeconomic models and how we assess different types of macroeconomic policies. This is something that I cover quite extensively in my Advanced Macroeconomics module. We also show you how you can use R, a program language in order to simulate models. If you are interested in what climate change means for economic development, for instance, what it means in terms of food insecurity, in terms of water scarcity, in terms of the agricultural sector and how climate change can undermine economic development. Then if you take the growth and development module that we have in our programs, you will be able to understand these issues in detail. You can also engage with the debates about the role of the growth. I don't know if you are familiar with the growth. The argument behind the growth is that if we want to address the crisis, it's not just necessary to invest in renewables, to invest in energy efficiency. We also need to reduce our consumption because we have a finite planet and our consumption is potentially too much. So this is a question that you might be interested in and the growth and development module also captures, analyzes this question. Now, I said before that there have been changes in development finance recently, but more broadly, overall financial institutions are in the process of change because of the climate crisis. So climate change has been at the core of what financial institutions do right now. It has caused a lot of debates about the role of central banks. There are a lot of demands for people who can work in the financial sector and understand climate risks because we have now the so-called climate stress test that many financial institutions want to do in the coming years. So we have a module which is called Green Finance whereby people can learn more about what is happening right now in finance, what is the new role of financial regulators and central banks in the context of the climate crisis. And let me also say that, of course, we do a lot of research on these issues. So for instance, in this Green Finance module, you will understand how we engage with central banks around the world in order to make them think more carefully about the implications of climate change and take action that is conducive to solutions. So that's all from my side. Thank you so much for your attention. Thanks also for your answers to the poll that I had before. We have some time and I would be very happy to answer any questions that you might have about what I covered or any broader questions that you might have about the economics of climate change and which are the key issues that you think that economists have to pay attention to in the coming years. So please, if there's any question, feel free to use the chat box. I will stop sharing my screen. Thanks a lot, James. So please, any broader question, any concerns that you have about what economists do with climate change? Because I also tried to highlight in my lecture that of course economists have worked on climate change, but this doesn't mean that they have done this in the best way. It doesn't mean that what economists do for climate change is always good. And as we are waiting for some questions, let me also say this. If you look at the finance over the last years, there are many financial institutions that want to understand how they can be protected from climate change. So we have, for instance, that credit rating agencies might start taking into account the negative effects that climate change might have on the ability of countries and people to repay their debt. Now, is it a good thing or a bad thing? Some people say that it's good that the financial institutions now care about climate change. Yes, definitely, but if credit rating agencies start incorporating climate vulnerability of different countries into their models, it means that they are going to downgrade all those countries that are more exposed to climate change. And which are the countries that are most exposed to climate change? As I said before, these are the countries in the global south that have the lowest responsibility for the climate crisis. So if climate finance uses this approach, which is basically to protect itself from climate change, this might have some negative implications for what is happening in the global south. So this is why it's very important for us to think from a more systemic way what is happening at the global level and to understand also the issue of justice. Otherwise, we might have that finance will contribute to making, will make the problem much worse than what it is right now. Another thing that I would like to emphasize is that if you look at the macroeconomic modeling approaches, you will see that most economies so far have supported this idea that the environmental problems refer to specific externality and this externality can be addressed just by having a carbon price. And this of course refers to the carbon tax, but the problem with this is that in most of these models, carbon tax are not combined with other policies. So some of you said before that it's a good idea to combine carbon taxes with some other climate policies. This is not the case in many macroeconomic approaches and the problem is that macroeconomists in main cases support governments in terms of advices that they give for climate change. And we have seen in the past that governments have only focused on carbon taxes and they have ignored other issues that might be particularly important for developing countries, whereby having a carbon tax might not be the best way to proceed because of the structure of the economies. And let me also say one more thing and then I will respond to the question that they have which is that in the EU, we have now a plan about climate change. We have the so-called EU Green Deal and part of this deal is that there will be carbon taxes related to the imports that the EU has from other countries. If we have that, there might be a negative effect on those countries that are carbon-intensive and export their goods and services to the EU because they will have now to pay for this. And again, a policy that will be introduced in the global north will have some negative effects in the global south. So a very big debate is what exactly the EU needs to do with respect to that. And many economies have recently looked into this issue. Right, let me respond to the question. Yes, I mentioned R and what we actually do in the advanced macroeconomics is a following. I introduced you to the different modeling approaches and then first of all, we use R in order to understand how we can simulate some standard macroeconomic models before we introduce anything about climate change. And as we do this, then I explain how we can incorporate the effects of climate change into macroeconomic models using R. So I will give you some codes and then I will ask you to solve some exercises based on these codes. And this is also part of your assignment. So you will need to learn how to use R in order to be able to get a high marketing in this module. But I also want to emphasize that the approach that we have in our master's programs is that we don't use R only for specific modules. You have an introduction to R at the beginning of the academic year. Then you use R in econometrics and you also use R in other modules like advanced macroeconomics. So you will not learn R only in advanced macroeconomics. You will know the foundations of R before but in advanced macroeconomics, I will show you how you can analyze climate change by using macroeconomic models. And of course, there are so many things that you can do with R. Having different scenarios can be quite a complicated process. What I will basically do is to allow you to understand the foundations of how we create these scenarios and how we compare different policies. So I will cover the basic stuff. Of course, I'm not going to cover all the details about what you can see in the academic literature but you will get the foundations in order for you to be able to do so after you finish the program. Great, thank you so much. If there is no other question, let me thank you again for joining us today. First of all, as I said, it's a great pleasure to meet you online and I look forward to meeting you in September in case you join us. We will have several events in the coming months as well as we are going to organize workshops, conferences. Some of them are linked with climate change as well. So if you're going to learn more about what we do as so as, please join some of these events. You will get the information that you need about this. And yeah, I enjoyed the rest of the week and it was very nice to meet you. Sorry, there's one more question. Yes, is climate change part of the macroeconomic policies for global markets? Yes, I mean, overall we have, let me say that in our modules, we have started incorporating climate change over the last two or three years and we continue to do that. So you will have the opportunity to engage with the question of the issue of climate change from many different perspectives. So yes, climate change is part of what we do. So thanks a lot and hope to see you in person soon. Bye-bye. Thank you everyone. And we will send the record session to your email address and also you can see it on so as YouTube website as well. Thank you everyone. Bye. Thanks, bye-bye. Thanks, Janice.