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Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature

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  • Signe Krogstrup
  • William Oman

Abstract

Climate change is one of the greatest challenges of this century. Mitigation requires a large-scale transition to a low-carbon economy. This paper provides an overview of the rapidly growing literature on the role of macroeconomic and financial policy tools in enabling this transition. The literature provides a menu of policy tools for mitigation. A key conclusion is that fiscal tools are first in line and central, but can and may need to be complemented by financial and monetary policy instruments. Some tools and policies raise unanswered questions about policy tool assignment and mandates, which we describe. The literature is scarce, however, on the most effective policy mix and the role of mitigation tools and goals in the overall policy framework.

Suggested Citation

  • Signe Krogstrup & William Oman, 2019. "Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature," IMF Working Papers 19/185, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:19/185
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    Cited by:

    1. Patrick BOLTON & Morgan DESPRES & Pereira da Silva Luiz Awazu & Frédéric SAMAMA & Romain SVARTZMAN, 2020. "Le « Cygne Vert » : les banques centrales à l’ère des risques climatiques," Bulletin de la Banque de France, Banque de France, issue 229.
    2. Channing Arndt & Chris Loewald & Konstantin Makrelov, 2020. "Climate change and its implications for central banks in emerging and developing economies," Working Papers 10001, South African Reserve Bank.
    3. Paola D'Orazio & Lilit Popoyan, 2020. "Taking up the climate change challenge: a new perspective on central banking," LEM Papers Series 2020/19, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Simon Dikau & Nick Robins & Matthias Täger, 2019. "Building a sustainable financial system: the state of practice and future priorities," Revista de Estabilidad Financiera, Banco de España;Revista de Estabilidad Financiera Homepage, issue Autumn.
    5. Florian Böser & Chiara Colesanti Senni, 2020. "Emission-based Interest Rates and the Transition to a Low-carbon Economy," CER-ETH Economics working paper series 20/337, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    6. Thomas Allen & Stéphane Dees & Jean Boissinot & Carlos Mateo Caicedo Graciano & Valérie Chouard & Laurent Clerc & Annabelle de Gaye & Antoine Devulder & Sébastien Diot & Noémie Lisack & Fulvio Pegorar, 2020. "Climate-Related Scenarios for Financial Stability Assessment: an Application to France," Working papers 774, Banque de France.

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