Assessing the macroeconomic effects of climate change transition policies

Marien Ferdinandusse, Friderike Kuik and Romanos Priftis

Economic Bulletin Boxes, 2024, vol. 1

Abstract: Emission reduction measures have been adopted at both country and European Union (EU) levels. This box assesses the impact on euro area real GDP and inflation of green fiscal discretionary measures as included in the December 2023 Eurosystem staff macroeconomic projections. Since these measures are unlikely to be sufficient to fully achieve the EU targets for emission reduction, energy efficiency and renewable energy production, model simulations are used to illustrate the medium-term impact of alternative transition policy scenarios. These simulations suggest modest downside risks to GDP and upside risks to inflation from transition policies to achieve EU targets, but the effects depend on the transition policy mix. JEL Classification: E3, E62, Q48

Keywords: DSGE models; fiscal measures; growth; Inflation; transition policies (search for similar items in EconPapers)
Date: 2024-02
Note: 673741
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