Green macrofinancial regimes

Daniela Gabor and Benjamin Braun

No 4pkv8, SocArXiv from Center for Open Science

Abstract: Debates about climate policy have neglected the question of macrofinancial pathways to decarbonisation, not all of which are politically and environmentally viable. We propose a theory of macrofinancial regimes, understood as combinations of monetary, fiscal, and financial institutions that shape the creation and allocation of credit/money, and hence the speed and nature of the green transition. Examining recent green industrial policy initiatives, we distinguish between a weak derisking state that tweaks the risk-return profile on infrastructure assets, and a robust derisking state that intervenes directly in the organisation of production by subsidizing capital expenditure in cleantech manufacturing. Although the derisking state is hegemonic today, coordination problems and regressive distributional consequences render this regime unstable. This instability may tip societies into carbon shock therapy, or it may give rise to a big green state, capable of planning and implementing a just green transition through non-market means of coordination.

Date: 2023-10-05
New Economics Papers: this item is included in nep-ene, nep-env and nep-hme
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:4pkv8

DOI: 10.31219/osf.io/4pkv8

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