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Sustainable economic policies: exploring the effects of ecosystemic macroprudential regulations

Author

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  • Thomas Lagoarde-Ségot
  • Gaëtan Le Quang
  • Laurence Scialom

Abstract

This paper explores the contribution of ecosystemic macroprudential regulations to the sustainable development goals in an ecological PK-SFC framework. We first discuss the link between banks and global warming; and present the case for connecting prudential regulation with planetary boundaries. We then report a set of simulations suggesting that in the short run, such ecosystemic prudential regulations could effectively green banks’ balance sheets and credit flows, and curtail brown investment; at the cost, however, of significant short-run output losses. In the longer run, the induced green transition sets the economy on a sustainable pathway, decreases inflationary pressures, and maintains real GDP at the baseline level, with favorable distributional effects for wage-earners. These results highlight the importance of a paradigm shift in prudential regulation in the fight against climate change.

Suggested Citation

  • Thomas Lagoarde-Ségot & Gaëtan Le Quang & Laurence Scialom, 2026. "Sustainable economic policies: exploring the effects of ecosystemic macroprudential regulations," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 49(1), pages 128-164, January.
    • Handle: RePEc:mes:postke:v:49:y:2026:i:1:p:128-164
    DOI: 10.1080/01603477.2025.2544047
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    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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