That unchecked climate change will profoundly affect the world’s economy well into the future is almost universally accepted among researchers. But the world is not a homogeneous economy; likewise, climate change will also affect different parts of the world in different ways.

In recent years, some central banks have added a new responsibility to their list of tasks: ameliorate the effects of climate change. This could mean monitoring the short- and long-term exposure of financial institutions to climate change, or it could mean actively directing regulated financial institutions to invest in certain industries. In either case, central banks will have to determine how best to anticipate the likely effects of climate change many years into the future.

Energy is an essential component of economic growth. At the same time, rising worldwide demand...

Kevin Murphy talks with Lars Peter Hansen, the David Rockefeller Distinguished Service Professor and Director of BFI's Macro Finance Research Program, about BFI's beginnings, his research and more.