This changes everything: Climate shocks and sovereign bonds

Serhan Cevik, João Tovar Jalles

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


Climate change is already a systemic risk to the global economy. While there is a large body of literature documenting potential economic consequences, there is scarce research on the link between climate change and sovereign risk. This paper therefore investigates the impact of climate change vulnerability and resilience on sovereign bond yields and spreads in 98 advanced and developing countries over the period 1995–2017. We find that the vulnerability and resilience to climate change have a significant impact on the cost government borrowing, after controlling for conventional determinants of sovereign risk. That is, countries that are more resilient to climate change have lower bond yields and spreads relative to countries with greater vulnerability to risks associated with climate change. Furthermore, partitioning the sample into country groups reveals that the magnitude and statistical significance of these effects are much greater in developing countries with weaker capacity to adapt to and mitigate the consequences of climate change.

Original languageEnglish
Article number105856
JournalEnergy Economics
Publication statusPublished - Mar 2022


  • Climate change
  • Government bond yields and spreads
  • Resilience
  • Vulnerability


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