TY  - BOOK
AU  - Carattini,Stefano
AU  - Heutel,Garth
AU  - Melkadze,Givi
ED  - National Bureau of Economic Research.
TI  - Climate Policy, Financial Frictions, and Transition Risk
T2  - NBER working paper series
PY  - 2021///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - March 2021; Hardcopy version available to institutional subscribers
N2  - We study climate and macroprudential policies in an economy with financial frictions. Using a dynamic stochastic general equilibrium model featuring both a pollution market failure and a market failure in the financial sector, we explore transition risk - whether ambitious climate policy can lead to macroeconomic instability. It can, but the risk can be alleviated through macroprudential policies - taxes or subsidies on banks' assets. Then, we explore efficient climate and macroprudential policy in the long run and over business cycles. The presence of financial frictions affects the steady-state value and dynamic properties of the efficient carbon tax. Macroprudential policy alone, without a carbon tax, is not very effective at addressing the pollution externality
UR  - https://www.nber.org/papers/w28525
UR  - http://dx.doi.org/10.3386/w28525
ER  -