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Pierre Guérin and Felix Suntheim

stress, real economic activity and oil market shocks—on firms’ environmental performance. The rest of the paper is organized as follows. Section II discusses the development of the sustainable finance sector at the onset of the COVID-19 crisis. Section III provides an overview of the data and econometric framework to analyze how past economic, financial and oil market shocks have impacted firms’ environmental performance. Section IV concludes with possible policy implications. II. The Covid-19 Crisis and Financing the Energy Transition The COVID-19

Pierre Guérin and Felix Suntheim
The shutdown in economic activity due to the coronavirus disease (COVID-19) crisis has resulted in a short-term decline in global carbon emissions, but the long-term impact of the pandemic on the transition to a low-carbon economy is uncertain. Looking at previous episodes of financial and economic stress to draw implications for the current crisis, we find that tighter financial constraints and adverse economic conditions are generally detrimental to firms’ environmental performance, reducing green investments. The COVID-19 crisis could thus potentially slow down the transition to a low-carbon economy. In light of the urgent need to reduce global greenhouse gas emissions, these findings underline the importance of climate policies and green recovery packages to boost green investment and support the energy transition. Policies that support the sustainable finance sector, such as improved transparency and standardization, could further help mobilize green investments.
Pierre Guérin and Felix Suntheim

: pguerin@imf.org ; fsuntheim@imf.org . Contents I. Introduction II. The Covid-19 Crisis And Financing The Energy Transition III. Lessons From Past Economic Crises For The Energy Transition During The Covid-19 Crisis A. Financial Constraints and Firms’ Environmental Performance B. Financial Constraints and Firms’ Investments in Green Technologies C. Firms’ Environmental Performance and Macro-financial Shocks D. Firms’ Environmental Performance and Oil-market Shocks IV. Conclusion V. References Figures 1. The Energy Transition during the

Dmitry Plotnikov

demand, and oil-specific demand. 5. Log-difference of real oil price in six in-sample episodes of sharp price declines. 6. Stability of estimates. Each panel shows the corresponding row of the estimate of cumulative long-run matrix (A 0 – A 1 – A 2 ) –1 . The date on the horizontal axis marks the starting date of the sample. All samples end in December 2015. 7. Growth response to world oil market shocks. Each chart displays only those results for which the ratio of the cumulative 1-year effect to its standard error is greater than 1.96. 8. Ratio of 1-year to

International Monetary Fund. Middle East and Central Asia Dept.

the weakening economic governance deriving from an increasingly difficult political process and worsening security. The authorities will be able to fend off the danger of the natural resource curse if they can improve political and security conditions, strengthen economic institutions, and implement sound policies. Fiscal policies should aim at financing the needed social and investment spending while building up adequate fiscal buffers to insulate the economy from oil market shocks. On the back of large oil exports, strong current account performance is expected to

International Monetary Fund. Monetary and Capital Markets Department

that the source of the oil price fluctuation is indeed key to understanding firms’ environmental response to a shock. Historically, when oil prices have fallen due to demand-side factors, environmental corporate performance has been weaker. By contrast, when oil prices have declined due to an oil supply shock, environmental performance of firms has improved ( Figure 5.5 ). To the extent that the COVID-19-induced oil price shock is largely a demand-driven shock, firms’ environmental performance is thus likely to suffer. 13 Figure 5.5. Oil Market Shocks and

Dmitry Plotnikov

-level quarterly real GDP data, which come from the World Economic Outlook database. Real GDP growth rates are included in the second-step regressions in year-on-year growth terms. Given the possible effect of structural changes in the response to world oil market shocks, all country-level estimates use samples starting in 2000:Q1. Furthermore, we restrict attention to countries having at least 10 years of data (i.e. 40 observations) over the period 2000:Q1–2015:Q4, which leaves us with a set of 72 countries. The minimum data requirements imposed imply the exclusion of some of

International Monetary Fund. Asia and Pacific Dept

, 3 In this regression model, the impulse response coefficients at horizon h correspond to ϕ jh . The lag length 12 is the maximum horizon for the impulse response function. Two specifications are estimated: one which includes 12 lags of each shock, and a second specification, following Killian (2009), where three separate regressions are estimated, one for each type of shock. 19. Results . Regression results indicate that oil market shocks explain a large portion of fluctuations in Malaysian GDP growth. Figure 4 shows the cumulated

Mr. Nooman Rebei and Rashid Sbia
This paper documents the determinants of real oil price in the global market based on SVAR model embedding transitory and permanent shocks on oil demand and supply as well as speculative disturbances. We find evidence of significant differences in the propagation mechanisms of transitory versus permanent shocks, pointing to the importance of disentangling their distinct effects. Permanent supply disruptions turn out to be a bigger factor in historical oil price movements during the most recent decades, while speculative shocks became less influential.
Mr. Nooman Rebei and Rashid Sbia

persistence of global oil market shocks, several experts advocate in favor of a long-lasting (permanent) impact of the recent shock on oil prices (see for instance Cherif et al., 2017 ; Sommer et al., 2016 ) especially in the wake of the recent sharp decline in oil prices (mid-2014); however, the existing literature did not empirically test this premise as none of the studies explicitly distinguishes transitory and permanent shocks in the proposed empirical setups. While we still attempt to identify the sources of fluctuations of oil market variables, the present paper