Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
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Daily Overview |
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Thematic Session: Climate policy and international financial markets (Streaming) Location: B009 Session Chair: Armon Rezai, Vienna University of Economics and Business Session Chair: Rick van der Ploeg, University of Oxford | |
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The Keynesian Climate Model 1: Banque de France; 2: Bank of International Settlements; 3: Ecole polytechnique, Institut Polytechnique de Paris Climate change confronts economies with two inflationary forces: climateflation from physical damages and greenflation from mitigation policies. This paper develops and estimates a nonlinear New Keynesian Climate model that integrates long run dynamics from Integrated Assessment Models with business cycle fluctuations typical of DSGE frameworks. The unified setting allows a systematic analysis of how climate change and mitigation affect inflation, output, and interest rates. We show that nominal rigidities are central for optimal carbon pricing. Ignoring them leads to miscalibrated taxes, excess inflation, and lower consumption. Paris aligned mitigation generates higher inflation than laissez faire paths, but appropriate monetary policy can offset pressures by tracking a rising natural rate and tolerating temporary output losses. | |