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Assessing the macroeconomic effects of climate change transition policies

Author

Listed:
  • Ferdinandusse, Marien
  • Kuik, Friderike
  • Priftis, Romanos

Abstract

Emission reduction measures have been adopted at both country and European Union (EU) levels. This box assesses the impact on euro area real GDP and inflation of green fiscal discretionary measures as included in the December 2023 Eurosystem staff macroeconomic projections. Since these measures are unlikely to be sufficient to fully achieve the EU targets for emission reduction, energy efficiency and renewable energy production, model simulations are used to illustrate the medium-term impact of alternative transition policy scenarios. These simulations suggest modest downside risks to GDP and upside risks to inflation from transition policies to achieve EU targets, but the effects depend on the transition policy mix. JEL Classification: E3, E62, Q48

Suggested Citation

  • Ferdinandusse, Marien & Kuik, Friderike & Priftis, Romanos, 2024. "Assessing the macroeconomic effects of climate change transition policies," Economic Bulletin Boxes, European Central Bank, vol. 1.
    • Handle: RePEc:ecb:ecbbox:2024:0001:4
    Note: 673741
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    References listed on IDEAS

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    Cited by:

    1. Nickel, Christiane & Kilponen, Juha & Moral-Benito, Enrique & Koester, Gerrit & Ciccarelli, Matteo & Enders, Almira & Holton, Sarah & Landau, Bettina & Venditti, Fabrizio & Bobeica, Elena & Brand, Cla, 2025. "A strategic view on the economic and inflation environment in the euro area," Occasional Paper Series 371, European Central Bank.
    2. Ciccarelli, Matteo & Darracq Pariès, Matthieu & Priftis, Romanos & Angelini, Elena & Bańbura, Marta & Bokan, Nikola & Fagan, Gabriel & Gumiel, José Emilio & Kornprobst, Antoine & Lalik, Magdalena & Mo, 2024. "ECB macroeconometric models for forecasting and policy analysis," Occasional Paper Series 344, European Central Bank.

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    Keywords

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    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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