Veranstaltung
13
Dez 2021

14:15 - 15:45
IWH Research Seminar

Virtual Lecture: Climate Policy, Financial Frictions, and Transition Risk

We study climate and macroprudential policies in an economy with financial frictions. Using a dynamic stochastic general equilibrium model featuring both a pollution market failure and a market failure in the financial sector, we explore transition risk – whether ambitious climate policy can lead to macroeconomic instability.

Wer
Garth Heutel  (Georgia State University)
Wo
via Zoom
Garth Heutel

Zur Person

Garth Heutel is Associate Professor of Economics at Georgia State University, Department of Economics.

We study climate and macroprudential policies in an economy with financial frictions. Using a dynamic stochastic general equilibrium model featuring both a pollution market failure and a market failure in the financial sector, we explore transition risk – whether ambitious climate policy can lead to macroeconomic instability. It can, but the risk can be alleviated through macroprudential policies – taxes or subsidies on banks’ assets. Then, we explore efficient climate and macroprudential policy in the long run and over business cycles. The presence of financial frictions affects the steady-state value and dynamic properties of the efficient carbon tax. Macroprudential policy alone, without a carbon tax, is not very effective at addressing the pollution externality. Read more ...


To join the lecture via ZOOM, please contact Alessandro Sardone.

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