The Economic Implications of Climate Action. Inflation

Les incidences économiques de l'action pour le climat. Inflation

Stéphane Dees, Elie Bellevrat, Annabelle de Gaye, François Geerolf (), Matthieu Lequien, Romain Schweizer, Athiana Tettaravou and Oriane Wegner
Additional contact information
Stéphane Dees: Banque de France
Elie Bellevrat: RTE - Réseau de Transport d'Electricité [Paris]
Annabelle de Gaye: Banque de France
François Geerolf: OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique
Matthieu Lequien: INSEE - Institut national de la statistique et des études économiques (INSEE)
Romain Schweizer: France Stratégie
Oriane Wegner: Banque de France

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Abstract: The direct effects of the climate transition on inflation stem first and foremost from the changes this transition will induce in the global equilibrium of energy markets. From this perspective, it seems certain that the coming years will be marked by increased volatility in global prices, a rise in the full cost of electricity, and a gradual decline in demand for fossil fuels in the countries most advanced in the transition. These developments would be reflected in inflation as measured by official statistics. Other changes may instead operate through quality effects rather than through an increase (or decrease) in prices. For example, in the price index, an electric vehicle is treated as a different product from an equivalent internal combustion engine vehicle: in other words, the replacement of internal combustion vehicles by more expensive electric vehicles does not raise the price index. On the contrary, the likely decline in the price of electric vehicles would contribute negatively to the price index.

Keywords: greenflation; Inflation; Changement climatique; Transition énergétique (search for similar items in EconPapers)
Date: 2023-05
Note: View the original document on HAL open archive server: https://hal.science/hal-05498714v1
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Published in France Stratégie. 2023

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