This paper studies the dynamic behavior of an economy under different environmental policy regimes in a New Keynesian model with nominal and real uncertainty. We find the following results: (i) an emissions cap policy is likely to dampen macroeconomic fluctuations; (ii) staggered price adjustment alters significantly the performance of the environmental policy regime put in place; (iii) the optimal environmental policy response to shocks is strongly influenced by the degree to which prices adjust and by the monetary policy reaction.
Annicchiarico, B., Di Dio, F. (2015). Environmental policy and macroeconomic dynamics in a new Keynesian model. JOURNAL OF ENVIRONMENTAL ECONOMICS AND MANAGEMENT, 69(1), 1-21 [10.1016/j.jeem.2014.10.002].
Environmental policy and macroeconomic dynamics in a new Keynesian model
ANNICCHIARICO, BARBARA
Formal Analysis
;
2015-01-01
Abstract
This paper studies the dynamic behavior of an economy under different environmental policy regimes in a New Keynesian model with nominal and real uncertainty. We find the following results: (i) an emissions cap policy is likely to dampen macroeconomic fluctuations; (ii) staggered price adjustment alters significantly the performance of the environmental policy regime put in place; (iii) the optimal environmental policy response to shocks is strongly influenced by the degree to which prices adjust and by the monetary policy reaction.File | Dimensione | Formato | |
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