Project description
How bankers can help fight climate change
Can monetary policy target climate change mitigation? The debate is ongoing. To answer the question, the Marie Skłodowska-Curie Actions GREENQE project will investigate how large a carbon emission and temperature reduction can be achieved by shifting the portfolio of central banks around the world towards green assets. The project will use a rich integrated assessment model with incomplete markets and aggregate risk, featuring a green and brown sector of production, asset markets, and fiscal and monetary authorities to quantify costs and benefits. The results of the project will be useful for all stakeholders, particularly central banks and governments.
Objective
"The United Nations Sustainable Development Goal 13 calls to ""Take urgent action to combat climate change and its impacts"" by 2030. This call to take action also reached central banks: A controversial debate of whether monetary policy shall target climate change mitigation is ongoing. This addresses also the use of titling the asset purchase programs towards green assets (green quantitative easing, green QE). GREENQE contributes to this discussion, by investigating how large of a carbon emission and temperature reduction could be achieved by tilting the corporate asset portfolio of central banks around the world towards green assets. Benefits from slowing down climate change are contrasted with costs from possible impediments to the monetary transmission channels.
These costs and benefits are quantified using a rich integrated assessment model with incomplete markets and aggregate risk, featuring a green and brown sector of production, asset markets and fiscal and monetary authorities. This allows to evaluate the trade-offs of greening central banks' asset purchases (climate change mitigation vs. impeding monetary transmission mechanisms) as well as to investigate whether a monetary policy focused on the business cycle horizon can be used effectively to address a slow-moving climate change process.
The results of GREENQE are of interest to various stakeholders, including foremost central banks as well as governments. If green QE is found to be an effective and not-costly tool it might be used to complement green fiscal policies of national governments and supranationals like the EU commission."
Fields of science
Keywords
Programme(s)
- HORIZON.1.2 - Marie Skłodowska-Curie Actions (MSCA) Main Programme
Funding Scheme
HORIZON-TMA-MSCA-PF-EF - HORIZON TMA MSCA Postdoctoral Fellowships - European FellowshipsCoordinator
1012WX Amsterdam
Netherlands