Revisiting monetary policy and price stability in the green transition

Andrew Jackson, Romain Svartzman, David Barmes and Luiz Awazu Pereira da Silva

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Climate change and volatile fossil fuel prices increasingly drive macroeconomic and price instability. A successful green transition is a precondition for price stability in the long term but could generate inflationary pressures over shorter time horizons. A restrictive monetary response to such pressures would disproportionately affect the capital-intensive green investment needed for a transition. To maintain price stability without compromising the green transition, we propose adaptive inflation targeting, adjustments to monetary operations, and an institutional architecture for systematic monetary–fiscal coordination.

JEL-codes: F3 G3 J01 N0 R14 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2026-07
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:140416

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