Climate change and implications for monetary policy

• Main Author: Ρουμελιώτης, Κωνσταντίνος
• Other Authors: Roumeliotis, Miltiadis
• Language: English
• Published: 2022
• Subjects: Climate change; Monetary policy; Central banks; Κλιματική αλλαγή; Νομισματική πολιτική; Κεντρικές τράπεζες

This study will address the current global issue of Climate Change, how monetary policy is affected by it, whether Monetary Policy can and should play a role in tackling it. Market imperfections strongly influence the volume of greenhouse gas emissions, which is a key driver of climate change. While governments should lead climate policies in the first place, a broad coalition of actors across society, including central banks, needs to contribute to transition to a carbon-neutral economy in a timely and orderly fashion. The study will then examine the various studies that have been done from time to time, analyze the data and the models they use and report the results they present. Subsequently, it will look at the role that Monetary Policy can play and what methods of discouragement it can use to reduce climate change. Finally, in the empirical study we will do, The study will show how Climate Change affects monetary policy through consumer expectations, changes in energy prices, the production gap created by a natural disaster, the price trend over the next twelve months and the number of natural disasters per year. It will show that the above variables affect the majority of time lags positively and lead to an increase in the rate of change of prices, which leads to an increase in inflation thus affecting monetary policy.