Green targeted lending operations in the Euro Area

Anh H. Le, Gazi Uddin and Brian Lucey

Economics Letters, 2024, vol. 243, issue C

Abstract: In this paper, we construct a Dynamic Stochastic General Equilibrium (DSGE) model to examine the implications of dual rates for green lending. We demonstrate that implementing a distinct interest rate for banks engaged in green lending can effectively mitigate transition risks while channeling more capital towards green production sectors and firms for an immediate cut of emissions and net zero emission economy targets.

Keywords: Dual rates; Optimal policy; Transition risk (search for similar items in EconPapers)
JEL-codes: E17 E32 E42 E43 Q54 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:243:y:2024:i:c:s016517652400377x

DOI: 10.1016/j.econlet.2024.111893

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