Abstract

It is well documented that climate change adaptation and mitigation require financial flows that are several times larger than currently observed. Relatedly, the necessary transition to net zero emissions presents an inherent instability associated with balancing the effects of economic damages caused by climate change and the financial burden incurred to prevent them. In this talk, I present a climate-economy model to analyze a monetary policy that could be implemented by central banks to improve the stability of the system: green quantitative easing, that is to say, large scale purchases of financial instruments used to fund green investment. I illustrate the stabilization effects of these polices with examples calibrated to data and similar proposals in the literature.

Practical information