Jens van't Klooster (University of Amsterdam) and Eric Monnet (Paris School of Economics and CEPR) look at how tight monetary policy impacts low-carbon investments. Most importantly, they suggest green credit policy instruments, central banks can use, that will enable them to address inflationary pressures without jeopardizing the long-term decarbonization of the economy.
Understanding the linkages between climate vulnerability and sovereign debt risk is pivotal for countries that want to step up their climate mitigation strategies. Bhavya Gupta (National University of Singapore) and Ramkishen S. Rajan (National University of Singapore) have curated the most recent theoretical and empirical literature on the effects of climate on sovereign debt risk.
In this brief, we ask whether the implementation of national climate policies may spur a global race to protectionism. Consumer or production subsidies and border carbon adjustments may have positive mitigation effects but can also generate trade distortions and give national industries a competitive advantage against foreign firms.
The recent experience with surging inflation, partly driven by supply shocks to the energy sector, has ampiflied concerns over "greenflation," inflationary pressures resulting from the transition to sustainable energy sources. For this digest Conny Olovsson (ECB and Sveriges Riksbank) and David Vestin (Sveriges Riksbank) have curated the most recent literature on the theoretical and empirical findings on how greenflation arises and what central banks can do to curb it. They, and the papers they have chosen, highlight the central role for foresighted monetary policy as well as a smooth carbon taxation path.

Donate Now