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Climate Change, Climate Policy, and the Macroeconomy

Author

Listed:
  • Frederick van der Ploeg
  • Armon Rezai
  • Rick van der Ploeg

Abstract

A review is presented of the macroeconomics of climate change and policy. The review starts with a tractable workhorse model of the macroeconomics of climate and carbon pricing. It then discusses extensions to multiple countries. A discussion of the effects of macroeconomic and climate uncertainties and tipping points on asset pricing and the carbon price is given, including a discussion of stranded assets and the run on oil. Attention is then paid to green technical progress and to the effects of climate change and climate policy on different generations and the income distribution. The review concludes with a discussion of the effects of climate shocks and carbon pricing shocks on unemployment, inflation, and the role of networks in the transmission of these shocks, and borrowing constraints and sovereign risk in the face of climate shocks.

Suggested Citation

  • Frederick van der Ploeg & Armon Rezai & Rick van der Ploeg, 2026. "Climate Change, Climate Policy, and the Macroeconomy," CESifo Working Paper Series 12480, CESifo.
    • Handle: RePEc:ces:ceswps:_12480
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    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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