Toward a green economy: the role of central bank's asset purchases

Climate Change Mitigation: How Effective is Green Quantitative Easing?

“…We maintain the long-run focus of prototypical integrated assessment models and thus analyze a stylized long-run green QE policy. This perspective is shared in recent work by Ferrari and Landi (2022) who, as we, develop a two sector integrated assessment model with a monetary authority to study the effectiveness of green QE in the long-run. Similar to our main finding they report that the effect of green QE on the stock of pollution is relatively small.…”

Will the green transition be inflationary? Expectations matter

“…We discuss about the implication of this assumption in the conclusions. As in Ferrari and Nispi Landi (2022), we assume that the green transition is driven by a gradually increasing emission tax:…”

“…We assume that households are infinitely lived, capital is a further factor of production, and that firms pay price adjustment costs. As in Ferrari and Nispi Landi (2022), we assume that the government announces the introduction of an emission tax that increases linearly for 30 years, reaching a level high enough to induce firms to abate all the emissions. In order to fully abate emissions, our calibration implies that the price of one ton of CO2 should be around 65 euro.…”

“…As in Ferrari and Nispi Landi (2022), we assume that period 0 corresponds to 2019Q4, when the government introduces an emission tax that increases linearly for 120 quarters, such that from 2050 on all emissions are abated; in order to fully abate emissions, the carbon price is around 65 Euro per ton of CO2. In the baseline simulation we assume perfect foresight.…”

To Be or Not to Be “Green”: How Can Monetary Policy React to Climate Change?

“…Such yet unseen scenarios offer ground to argue that central banks should engage in "proactively" integrating climate change considerations in their policies. 19 Several recent studies point in this direction, which is to say that once climate policies are in place, monetary policy can play a role in supporting the transition (see Ferrari and Nispi Landi, 2021;Ferrari and Pagliari, 2021;Benmir and Roman, 2021;Annicchiarico and Di Dio, 2015). In particular, active climate-mitigating fiscal policies could change the volatility of output and inflation which, in turn, implies changes to the optimal policy response of central banks (see Ferrari and Pagliari, 2021).…”