TY  - UNPD
A1  - Dück, Alexander
A1  - Le, Anh H.
T1  - Transition risk uncertainty and robust optimal monetary policy
N2  - Climate change has become one of the most prominent concerns globally. In this paper, the authors study the transition risk of greenhouse gas emission reduction in structural environmental-macroeconomic DSGE models. First, they analyze the uncertainty in model prediction on the effect of unanticipated and pre-announced carbon price increases. Second, they conduct optimal model-robust policy in different settings. They find that reducing emissions by 40% causes 0.7% to 4% output loss with 2% on average. Pre-announcement of carbon prices affects the inflation dynamics significantly. The central bank should react slightly less to inflation and output growth during the transition risk. With optimal carbon price designs, it should react even less to inflation, and more to output growth.
T3  - Working paper series / Institute for Monetary and Financial Stability - 187 
KW  - Climate change
KW  - Environmental policy
KW  - Optimal policy
KW  - Transition risk
KW  - Model uncertainty
KW  - DSGE models
Y1  - 2023
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/71203
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-712038
UR  - https://www.imfs-frankfurt.de/forschung/imfs-working-papers/details.html?tx_mmpublications_publicationsdetail%5Bcontroller%5D=Publication&tx_mmpublications_publicationsdetail%5Bpublication%5D=443&cHash=36915dc6df636141e98de636edfe8d3e
PB  - Johann Wolfgang Goethe-Univ., Inst. for Monetary and Financial Stability
CY  - Frankfurt am Main
ER  -