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Climate change, Keynesian stimulus and supervillainy

Hawaii Senator Brian Schatz asked Fed Chair Janet Yellen an interesting question on day one of her semi-annual testimony to Congress:I wanted to ask you about climate change. It is affecting our economy in a number of ways, such as prolonged droughts that reduce agricultural yields, coastal flooding, increased severity of storms and the unpredictability of weather forecasts on which many of our industries depend. In 2016 NOAA reported 15 separate bn climate events… And lest we think this is an aberration, it’s important to remember that the number and the cost of these events has doubled over the last decade, and has increased eightfold over the last 30 years.So climate events are taking a toll on our economy and they are expected to become more and more intense going forward. So my question to you is, to what extent does the Fed take into account the impacts of climate change in assessing our economic outlook and future economic risks?Some people on Twitter (your correspondent included) pointed out that government spending on climate change — disaster relief, storm-proofing cities, etc. — counts as Keynesian economic stimulus.That’s been addressed many times, of course. One especially entertaining example comes from a decade ago.

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Hawaii Senator Brian Schatz asked Fed Chair Janet Yellen an interesting question on day one of...

Alexandra Scaggs
Alexandra Scaggs is a markets reporter for the Wall Street Journal in New York. She writes about the U.S. stock market and investment trends. She also covers the business of markets research, writing on the calls, personalities and moves of high-profile analysts and strategists. Ms. Scaggs graduated from Washington & Lee University with a degree in business journalism.

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