Are macroeconomic policies better in curbing air pollution than environmental policies? A DSGE approach with carbon-dependent fiscal and monetary policies

Chan, Ying Tung

doi:10.1016/j.enpol.2020.111454

Cited by 84 publications

(24 citation statements)

References 35 publications

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“…It implies that a 1% decrease in government expenditure leads to a reduction in the ratio of CO 2 by 0.062% in Malaysia, 0.181% in UAE, 0.092% in Thailand, 0.280% in Indonesia, 0.042% in Turkey, 0.031% in Iran, and 0.178% in India. Moreover, this finding is also consistent with Katircioglu and Katircioglu (2018) and Chan (2020), who found that a contractionary fiscal policy could decrease environmental pollution. Contractionary fiscal policy instruments decrease final good demand by reducing government expenditure and household consumption, in adverse, achieve the environmental quality in Asian economies except for Japan.…”

Section: Empirical Results and Discussionsupporting

confidence: 90%

Examining the asymmetric effects of fiscal policy instruments on environmental quality in Asian economies

Ullah

Majeed

Chishti

2020

Environ Sci Pollut Res

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Empirical studies pertaining to the effects of fiscal policy instruments on environmental quality have provided mixed evidence. We consider the asymmetric effects of fiscal policy instruments on environmental quality for the top ten Asian carbon emitters over the period 1981-2018. We go beyond the literature and claim that the effects could be asymmetric. More specifically, we found that a positive shock in government expenditure will worsen environmental quality in Malaysia,

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Section: Empirical Results and Discussionsupporting

confidence: 90%

Examining the asymmetric effects of fiscal policy instruments on environmental quality in Asian economies

Ullah

Majeed

Chishti

2020

Environ Sci Pollut Res

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“…Huang and Punzi (2019) incorporated financial friction, according to Bernanke et al (1999), and found that environmental regulations can accelerate the risks that the financial system faces. Chan (2020) introduced environmental targeting carbon taxation, fiscal, and monetary policies and compared their different effects in terms of improving the environment and welfare.…”

Section: Introductionmentioning

confidence: 99%

Engaging central banks in climate change? The mix of monetary and climate policy

et al. 2021

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Given the recent debate on central banks' role under climate change, this research theoretically investigates the mix of monetary and climate policy and provides some insights for central banks who are considering their engagement in the climate change issue. The "climate-augmented" monetary policy is pioneeringly proposed and studied.We build an extended Environmental Dynamic Stochastic General Equilibrium (E-DSGE) model as the method. By this model, we find the following results. First, the making process of monetary policy should consider the existing climate policy and environmental regulation. Second, the coefficients in traditional monetary policy can be better set to enhance welfare when climate policy is given. This provides a way to optimise the policy mix. Third, if a typical form climate target is augmented into the monetary policy rule, a dilemma could be created. This means that it has some risks for central banks to care for the climate proactively by using the narrow monetary policy.At the current stage, central banks could and should use other measures to help the climate and the financial stability.

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“…Golosov et al (2014) derive a simple formula for the optimal carbon tax. Chan (2020) explores the interaction between standard macroeconomic policies (fiscal and monetary) with carbon taxation. Barrage (2020) studies the interaction of carbon taxes with other standard distortionary taxes.…”

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confidence: 99%

Whatever it Takes to Save the Planet? Central Banks and Unconventional Green Policy

Ferrari

Landi

2021

SSRN Journal

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We study the effects of a temporary Green QE, defined as a policy that temporarily tilts the central bank's balance sheet toward green bonds, i.e. bonds issued by firms in nonpolluting sectors. To this end, we merge a standard DSGE framework with an environmental model in which detrimental emissions increase the stock of pollution. Imperfect substitutability between green and brown bonds is a necessary condition for the effectiveness of Green QE. While a temporary Green QE is an effective tool for mitigating detrimental emissions, it has limited effects in reducing the stock of pollution, if pollutants, e.g. CO2, stay in the atmosphere for a long time. The welfare gains of Green QE are positive but small. Welfare gains are larger if the flow of emissions negatively affects the utility of households.

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Are macroeconomic policies better in curbing air pollution than environmental policies? A DSGE approach with carbon-dependent fiscal and monetary policies

Cited by 84 publications

References 35 publications

Examining the asymmetric effects of fiscal policy instruments on environmental quality in Asian economies

Examining the asymmetric effects of fiscal policy instruments on environmental quality in Asian economies

Engaging central banks in climate change? The mix of monetary and climate policy

Whatever it Takes to Save the Planet? Central Banks and Unconventional Green Policy

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