Josselin Roman, "Policy Interaction and the Transition To Clean Technology"

Job talk. Josselin Roman is a Phd Candidate in Economics - PSL Research University. He will present the paper "Policy Interaction and the Transition To Clean Technology".

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Josselin Roman


Using a dynamic stochastic general equilibrium model with financial frictions and an environmental externality embedded in a two-sector production economy (i.e. green and brown sectors), we investigate the role and efficiency of macroprudential and monetary policies under the presence of a carbon market (such as the European Trading Scheme). We identify two inefficiencies arising from the existence of the European market for carbon permits: a welfare wedge and a risk premium distortion. We find that sectoral macroprudential weights on loans favorable to the green sector can help in closing the welfare wedge. With respect to risk premia, we show that a quantitative easing rule would allow authorities to drastically reduce the effect of carbon price volatility on corporate risk premia. In addition, we find that macroprudential policy is needed to provide an incentive to central banks to tilt large scale asset purchase programs toward green bonds.

Read the paper [pdf]

Host: Christian Traeger


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Published Jan. 11, 2022 1:24 PM - Last modified Jan. 12, 2022 1:02 PM