There is increased willingness to address climate change challenges and central banks (among other institutions) are playing a growing role in mitigation strategies. However, tackling climate change requires innovating classic research paths, as they tend to favour the use of models that capture only one of the following: environmental variables, macroeconomic behaviour, or monetary and financial policy.<\/p>\n
Policy recommendations based on such models that aim to mitigate the impacts of greenhouse gases should be able to capture macroeconomic variations, monetary and financial policy, as well as environmental constraints, as these are tightly linked. In addition, policymakers are more than ever in need of models that capture the most complete image of the economy in order to take the best course of action.<\/p>\n
The authors of this paper assess the effectiveness and interactions of different policies – fiscal, monetary, and macroprudential, each of which is aimed at reducing CO2<\/sub> emissions – using a macro-financial framework. They show that while a substantial carbon tax is needed in the Euro Area to be aligned with the Paris Agreement, it is likely not enough to meet the additional efforts needed to mitigate climate change. Macroprudential and monetary policies are shown to be necessary, complementary policy tools and could play a major role in climate change mitigation.<\/p>\n This research aims to provide central banks and similar institutions with the tools to contribute to climate change mitigation and demonstrates the importance of including these institutions in the push to reduce global emission levels.<\/p>\n This paper was originally published in April 2020 and an update published on 20 July 2021. <\/em><\/p>\n\n","protected":false},"excerpt":{"rendered":"\n This paper assesses the effectiveness and interactions of different policies aimed at reducing carbon dioxide emissions, using a macro-financial framework. The research aims to provide central banks and similar institutions with the tools to contribute to climate change mitigation and demonstrates the importance of including these institutions in the push to reduce global emission levels.<\/p>\n\n","protected":false},"author":23,"featured_media":29008,"template":"","tags":[187,1158,1051,1104,1923,517,1807,1924,642],"publication-type":[435],"topic_area":[4694,4712,4713],"class_list":["post-49577","publication","type-publication","status-publish","has-post-thumbnail","hentry","tag-carbon-tax","tag-central-banks","tag-clean-technology","tag-climate-change-mitigation","tag-fiscal-policy","tag-implementing-the-paris-agreement","tag-macroprudential-policies","tag-qe","tag-quantitative-easing","publication-type-working-papers","topic_area-policy-evaluation","topic_area-central-banks-and-other-financial-institutions","topic_area-global-financial-system"],"acf":{"exclude_from_sync":{"ref_value":"field_560538b0e7350","value":"0","type":false,"post_type":""},"downloads":{"ref_value":"field_52f16cc1a80f2","value":["https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-content\/uploads\/2020\/04\/working-paper-337-Benmir-Roman-Jul21.pdf"],"type":"download","post_type":""},"rss_newsletter":{"ref_value":"field_54f5c2c1544d8","value":"","type":false,"post_type":""},"profile_link":{"ref_value":"field_52f164b5189e9","value":["ghassane-benmir","josselin-roman"],"type":"relationship","post_type":"profile"},"spotlight":{"ref_value":"field_52f80896506d3","value":"","type":false,"post_type":""}},"yoast_head":"\nKey points for decision-makers<\/h2>\n
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