Modelling Monetary and Fiscal Policy to Achieve Climate Goals
Research output: Working paper
Electronic versions
Links
- https://rednie.eco.unc.edu.ar/files/DT/310.pdf
Final published version
We present and estimate a Bernanke et al. (1999)-type dynamic general equilibrium model modified to allow the authorities to use monetary and fiscal policy to shape bank behavior in support of climate goals. In the model, central bank refinancing and reserve requirements are employed to support bank lending for environmentally friendly projects at lower rates of interest than for other projects. At the same time, fiscal policy supports green bank lending through loan guarantees, which also reduces the relative cost of borrowing by green firms. Under reasonable parameters of the model, rediscount lending is shown to be the most effective policy tool for directing bank lending to support climate goals.
| Original language | English |
|---|---|
| Publisher | RED Nacional de Investigadores en Economia |
| Volume | DOCUMENTO DE TRABAJO N° 310 |
| Publication status | Published - 1 Mar 2024 |