The macroeconomic effects of climate change and the green transition

Modelling interaction between climate change, the green transition and the macroeconomy requires empirically validated assumptions. The presentation will focus on a few questions of relevance from the perspective of central banks and on the importance to understand the business cycle effects of climate-related shocks and risks. Based on recent empirical and modelling work on the topic and through the lens of standard economic concepts and models, the presentation will shed light on the demand and supply channels of climate-related shocks, on the importance of appropriately choosing the variables and proxies to ‘identify’ the shocks and account for the transmission channels in empirical analysis, and on the asymmetric and heterogenous effects of weather shocks and climate policies across countries. The presentation will conclude with implications for modellers and policy makers.