Macroeconomic Impact of Environmental Policy Uncertainty and Monetary Policy Implications

This paper evaluates the macroeconomic implications of uncertainty arising from delays or unpredictability regarding the timing and extent of environmental policy implementation. An environmental dynamic stochastic general equilibrium (E-DSGE) model shows that increasing uncertainty about environmental policies is associated with a subsequent decline in investment, as firms prefer to postpone investment decisions. The decline in […]

Green Transition and Financial Stability: The Role of Green Monetary and Macroprudential Policies and Vouchers

This paper analyses a mix of alternative policies in supporting the green transition and the phase-out of fossil fuels, without compromising financial stability. An environmental dynamic stochastic general equilibrium (E-DSGE) model with two sectors (green and brown) and endogenous default is developed to assess potential climate-induced financial stability threats that can be mainly generated through […]

Navigating Geopolitical Crises for Energy Security: Evaluating Optimal Subsidy Policies via a Markov Switching DSGE Model

How can policymakers design optimal subsidy policies that enhance energy security in the face of energy disruptions caused by geopolitical conflicts? This paper aims to answer this question, addressing the shortcomings of existing integrated assessment models for environmental evaluation that do not adequately account for the environmental and economic impacts of geopolitical conflicts and do […]

E-DSGE Model With Endogenous Capital Utilization Rate

To evaluate the quantitative impact of the transmission mechanism, we introduce distinct features to the E-DSGE framework, including endogenous capital utilisation, time-varying depreciation of capital, and environment quality shocks. We find that the complementarity between energy and capital leads to an amplification effect of the conventional transmission mechanism. Our model with these ingredients ranks any […]