Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/315871 
Year of Publication: 
2024
Citation: 
[Journal:] Eurasian Economic Review [ISSN:] 2147-429X [Volume:] 14 [Issue:] 1 [Publisher:] Springer International Publishing [Place:] Cham [Year:] 2024 [Pages:] 39-60
Publisher: 
Springer International Publishing, Cham
Abstract: 
In recent years central bankers have devoted increased attention to the question of whether and how to intervene to address the growing environmental and climate crisis. The climate intervention debate gained momentum during a period of low inflation and loose monetary policy in core economies – a time characterised by near zero interest rates and large asset purchase programmes. Since 2021, however, the macroeconomic context has changed. Against this background, the paper analyses the contradictory and problematic nature of the direction monetary policy has taken in reaction to higher inflation. It argues that higher interest rates delay the green transformation by raising the cost of sustainable investments, and that the resulting delay also hampers prospects for achieving price stability. The paper concludes that the present macroeconomic environment demands a ‘greener and cheaper’ monetary policy approach designed to address the environmental and climate crisis and also to simultaneously fight inflation.
Subjects: 
Green monetary policy
Central banking
Inflation
Price stability
Interest rates
Environmental and climate risks
JEL: 
E50
E52
Q58
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article
Document Version: 
Published Version

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