Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/180283 
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7021
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We study monetary policy under climate change in order to answer the question of whether monetary policy should take into account the expected impacts of climate change. The setup is a new Keynesian dynamic stochastic general equilibrium model of a closed economy in which a climate module that interacts with the economy has been incorporated, and the monetary authorities follow a Taylor rule for the nominal interest rate. The model is solved numerically using common parameter values and fiscal data from the euro area. Our results, which are robust to a large number of sensitivity checks, suggest non-trivial implications for the conduct of monetary policy.
Subjects: 
climate change
monetary policy
new Keynesian model
Taylor rule
JEL: 
E50
E10
Q50
Document Type: 
Working Paper
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