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The effects of climate change on a small open economy

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  • George Economides
  • Anastasio Xepapadeas

Abstract

We investigate the impact of climate change on the macroeconomic performance of a small open economy. The setup is a new Keynesian dynamic stochastic general equilibrium model of a small open economy without monetary policy independence in which a climate module that interacts with the economy has been incorporated. The model is solved numerically using common parameter values, fiscal data and projections about temperature growth from the Greek economy. Our results, suggest that climate change implies a significant output loss and a dramatic deterioration of competitiveness.

Suggested Citation

  • George Economides & Anastasio Xepapadeas, 2019. "The effects of climate change on a small open economy," CESifo Working Paper Series 7582, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_7582
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    References listed on IDEAS

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    More about this item

    Keywords

    climate change; monetary policy; new Keynesian models;

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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