|Host Name||:The SEACEN Centre|
|Date From||:20 Sep 2022|
|Date To||:20 Sep 2022|
Seminar Title: “Climate Policy, Financial Frictions and Transition Risk”
Presenter: Prof. Givi Melkadze
Affiliation: Department of Economics, Georgia State University
Climate and macroprudential policies in an economy with financial frictions are both studies. Using a dynamic stochastic general equilibrium model featuring both a pollution market failure and a market failure in the financial sector, transition risk is explored – 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, efficient climate and macroprudential policy in the long run and over business cycles are explored. 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.
The paper to be presented can be downloaded from the NBER website at this address:
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