Climate Actions, Public Investment and Inflationary Effects in a Small Open Economy

Guido Traficante

No WP 1/2025, Working and Discussion Papers from Research Department, National Bank of Slovakia

Abstract: This paper studies the role of public investment and international spillovers in response to climate actions. Using a small-open economy model of a country belonging to a monetary union, it is shown that the inflationary and recessionary effects of a green policy (reduction in emissions or a higher price of fossil energy) can be dampened when the government follows a productive public spending which spurs private sector’s productivity and induces a real depreciation. Moreover, the paper documents that when the climate action is followed just by the domestic economy, it is significantly more costly and the foreign counterpart enjoys the benefits of this kind of policy.

JEL-codes: E52 E62 F41 F42 Q50 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2025-02
References: Add references at CitEc
Citations:

Downloads: (external link)
https://nbs.sk/dokument/62ffc674-bf6c-45d9-8839-c3 ... tiahnut/?force=false (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:svk:wpaper:1116

Access Statistics for this paper

More papers in Working and Discussion Papers from Research Department, National Bank of Slovakia Contact information at EDIRC.
Bibliographic data for series maintained by ().