Arbeitspapier
Emission-based interest rates and the transition to a low-carbon economy
We use a dynamic general equilibrium model to study a climate-oriented monetary policy in the form of emission-based interest rates set by the central bank. Liquidity costs of banks increase with the emission intensity of their asset portfolio, leading banks to favor low-carbon assets and to improve the financing conditions for clean sectors. We show that such a monetary policy supports the decarbonization of the economy and reduces climate damage, as more resources are channeled to low-carbon sectors and incentives to adopt cleaner technologies increase across all sectors. We illustrate these effects by calibrating our model to data for the Euro Area.
- Language
-
Englisch
- Bibliographic citation
-
Series: Economics Working Paper Series ; No. 20/337
- Classification
-
Wirtschaft
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
Monetary Policy
Central Banks and Their Policies
Environment and Growth
- Subject
-
climate change
monetary policy
banks
innovation
financial stability
- Event
-
Geistige Schöpfung
- (who)
-
Böser, Florian
Colesanti Senni, Chiara
- Event
-
Veröffentlichung
- (who)
-
ETH Zurich, CER-ETH - Center of Economic Research
- (where)
-
Zurich
- (when)
-
2020
- DOI
-
doi:10.3929/ethz-b-000421404
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Böser, Florian
- Colesanti Senni, Chiara
- ETH Zurich, CER-ETH - Center of Economic Research
Time of origin
- 2020
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