Macropolicy

Climate policies have been advocated to foster investments in mitigation and adaptation. Most debated policies include fiscal measures (e.g. carbon tax and carbon pricing), but recently, green monetary policies (e.g. green asset purchases), green collaterals and macroprudential regulations (e.g. green supporting/brown penalizing factor) have gained policy attention. The conditions under which such policies can contribute to align the economy and finance to sustainability, while preventing unintended effects on financial instability and inequality, have still to be assessed and limitations of traditional macroeconomic and financial risk models to assess these impacts could lead to a false sense of control on risk. This session will bring together research that quantitatively assesses the direct and indirect impacts of green fiscal, monetary and macroprudential policies (or ensembles) on investors’ decisions and financial stability, considering the uncertainty and non-linearity of climate risks.