The potential contribution of central banks to green finance

Breitenfellner, Andreas; Pointner, Wolfgang; Schuberth, Helene

doi:10.3790/vjh.88.2.55

Cited by 25 publications

(14 citation statements)

References 17 publications

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“…And, if forecast errors are large enough, they could result in the wrong policy decisions with irreversible consequences (Buddhari and Chensavasdijai 2003). Further, climate-related variables such as temperature shocks are trend rather than cyclical, which complicates matters for central banks in terms of achieving an optimal monetary policy response (Breitenfellner et al 2019). Moreover, unlike other climaterelated events such as natural disasters that occur at a point in time and generally generate short-term effects, the inflationary effects of temperature shocks are generally continuous and persistent and can last over several years.…”

Section: Implications For Monetary Policymentioning

confidence: 99%

Climate and monetary policy: do temperature shocks lead to inflationary pressures?

Mukherjee¹,

Ouattara

2021

Climatic Change

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In the race towards economic growth, increased pollutant emissions have spurred the rise in global surface temperatures, intensifying the process of climate change. While the existing literature on the economic impact of climate-related variables has looked at outcomes such as growth, income, fiscal response, and poverty, the effect of temperature shocks on inflation has largely been neglected. This paper is an attempt to fill this lacuna. Indeed, we analyze the dynamic impact of temperature shocks on inflation, a key policy variable of most central banks. We use a panel-VAR method with fixed-effects and a sample of developed and developing countries over the period 1961–2014. Our results suggest that temperature shocks lead to inflationary pressures. Worryingly, and for developing countries in particular, we find that these effects persist several years after the initial shock. Our finding remained unaltered by various robustness checks. We show that these effects pose a threat to monetary policy making. We argue that central banks should pay more attention to temperature shocks.

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Section: Implications For Monetary Policymentioning

confidence: 99%

Climate and monetary policy: do temperature shocks lead to inflationary pressures?

Mukherjee¹,

Ouattara

2021

Climatic Change

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“…Next, we used two variables related to central banks' characteristics: central bank transparency (CBT) and central bank independence (CBI). Central banks have the potential to support the so-called green policy by managing financial instruments that lead to more investment in renewable energy [78]. The role of today's central banks is changing as they take into account climate-related risk and aim at mitigating CO 2 emissions to maintain financial stability.…”

Section: Criteria Selectionmentioning

confidence: 99%

Carbon Dioxide and Greenhouse Gas Emissions: The Role of Monetary Policy, Fiscal Policy, and Institutional Quality

et al. 2022

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Environmental control remains a salient aspect of states’ policies in the present decade. To reduce emissions, governments and central banks tend to adopt various strategies. The present research quantifies the nexus between fiscal and monetary policy, institutions’ quality, central bank characteristics, and carbon dioxide and greenhouse gas emissions. Data has been sourced from 95 countries during the period from 1998 to 2019. According to the empirical results, the main determinants of gas emissions in developing countries are economic growth, government expenses, and central bank independence, whereas, in developed countries, they are economic growth, government efficiency, and central bank transparency and independence. Economic growth is a significant deteriorating factor in the state of the environment. By contrast, institutional and bureaucratic quality, measured through government effectiveness and expansionary fiscal policies as well as central bank independence and transparency, are ameliorating factors, as they decrease emissions. To conclude, governments must first reduce control over central banks and target government spending on the energy transition.

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“…The effectiveness of such measures has been verified in Korea, Russia and other countries [ 11 , 12 , 13 , 14 ]. The financial measures are generally promoted by two key partners: governments and financial institutions [ 15 , 16 , 17 ]. For example, a government can set budget benchmarks and provide financial assistance for carbon-intensive industries (e.g., energy and transportation) to achieve low-carbon development [ 18 , 19 , 20 ].…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Measures to Reduce Carbon Emissions in Britain, Japan and the United States: A SWOT Analysis

Zhang

Wei

2022

IJERPH

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To mitigate global warming, China, the world’s largest greenhouse gas emitter, has set the goals of achieving carbon peak by 2030 and carbon neutrality by 2060, and financial measures could play an important role. To avoid unnecessary costs, China could learn from the experience of other countries to better understand the potential role of financial measures in achieving carbon emission reduction goals. Hence, this article adopts a SWOT analysis to compare the financial measures taken by Britain, Japan and the United States in the process of carbon emission reduction in the last twenty years. This article finds that government funds and financial innovation have contributed markedly to carbon emission reduction in those three countries. With the help of the SWOT analysis, we recommend that China take financial measures to help achieve carbon peaking and carbon neutrality goals from four aspects: formulating proper policy, regulating carbon trading market, strengthening international cooperation, and promoting innovation.

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The potential contribution of central banks to green finance

Cited by 25 publications

References 17 publications

Climate and monetary policy: do temperature shocks lead to inflationary pressures?

Climate and monetary policy: do temperature shocks lead to inflationary pressures?

Carbon Dioxide and Greenhouse Gas Emissions: The Role of Monetary Policy, Fiscal Policy, and Institutional Quality

Financial Measures to Reduce Carbon Emissions in Britain, Japan and the United States: A SWOT Analysis

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