Is the Green Transition Inflationary?

Marco Del Negro, Julian di Giovanni and Keshav Dogra

No 20230214, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Are policies aimed at fighting climate change inflationary? In a new staff report we use a simple model to argue that this does not have to be the case. The model suggests that climate policies do not force a central bank to tolerate higher inflation but may generate a trade-off between inflation and employment objectives. The presence and size of this trade-off depends on how flexible prices are in the “dirty” and “green” sectors relative to the rest of the economy, and on whether climate policies consist of taxes or subsidies.

Keywords: inflation; climate policy; green transition (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
Date: 2023-02-14
New Economics Papers: this item is included in nep-ban, nep-ene, nep-env and nep-mon
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Citations: View citations in EconPapers (9)

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Working Paper: Is the Green Transition Inflationary? (2023)
Working Paper: Is the Green Transition Inflationary? (2023)
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