Alessandro Ferrari

“Whatever it takes to save the planet? Central banks and unconventional green policy”

Event description

Alessandro Ferrari presented the paper “Whatever it takes to save the planet? Central banks and unconventional green policy” he co-authored with Valerio Nispi Landi. From the abstract:

We study the effects of a temporary Green QE, defined as a policy that temporarily tilts the central bank’s balance sheet toward green bonds, i.e. bonds issued by firms in non-polluting sectors. To this purpose, we merge a standard DSGE framework with an environmental model. In our model, detrimental emissions produced by the brown sector increase the stock of pollution. We find that the imperfect substitutability between green and brown bonds is a necessary condition for the effectiveness of Green QE. Under the assumption of imperfect substitutability, we point out the following results. A temporary Green QE is an effective tool in mitigating detrimental emissions. However, Green QE has limited effects in reducing the stock of pollution, if pollutants are slow-moving variables such as atmospheric carbon. The welfare gains of Green QE are positive but small. Welfare gains increase if the flow of emissions negatively affects also the utility of households.

Moderator:

Pierre Monnin
Senior Fellow, CEP

Alessandro Ferrari

Alessandro Ferrari, joined the Economics and Research Department of the Bank of Italy in 2016 as an Economist at the Monetary Policy Strategy Section. In 2019 and 2020 he worked at the ECB as a national expert in the Monetary Policy Strategy Division. He received a PhD in Economics and Finance from Bocconi University (Milan). His research in the last years spans the effects of demographics on macroeconomic and financial variables, the two-way relationship between inequality/heterogeneity and the transmission of monetary policy, and the effects of monetary policy on climate change.

Paper and slides

“Whatever it takes to save the planet? Central banks and unconventional green policy” (paper)

“Whatever it takes to save the planet? Central banks and unconventional green policy” (slides)

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