February 6, 2023
Wolfgang Pointner

“The Effects of Climate Change on the Natural Rate of Interest: A Critical Survey”

Event Description

Wolfgang Pointner will present findings from his recent paper (with Francesco Paolo Mongelli and Jan Willem van den End), “The effects of climate change on the natural rate of interest: a critical survey”

From the abstract:

This survey reviews the literature about the impact of climate change on the natural rate of interest (r*), an important yardstick for monetary policy. Economic and financial developments can lower r* in scenarios with increasing climate-related damages and uncertainty that reduce productivity growth and raise precautionary savings. Instead, in scenarios that assume innovations and investments induced by transition policies, r* could be affected positively. Orderly climate policies have a pivotal role by facilitating the transition to a carbon-neutral economy and supporting a steady investment flow. We discuss the main models used to simulate the effects of climate change on r* and summarize the outcomes. The downward effects of climate change on r* can be substantial, even taking into account the high degree of uncertainty about the outcomes. Moreover, the downward pressure on r* will further challenge monetary policy in the long run, by limiting its policy space.


Pierre Monnin
Senior Fellow, CEP

Wolfgang Pointner

Wolfgang Pointner is an Advisor in the Economics Department of the Oesterreichische Nationalbank (OeNB), the central bank of Austria. He has been working on financial stability risks of climate change and has contributed to the review of the ECB monetary strategy. Previously, he held positions in the European Commission, the Austrian Ministry of Finance and as Economic Counselor to the Austrian Federal Chancellor. Next to his research interest in financial risks and monetary policy implications of climate change, Mr. Pointner holds a degree in Economics from the University of Vienna and has published on financial market regulation, innovative corporate funding and financing conditions for enterprises in Austria.

Date and time zone

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