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Climate policy is macroeconomic policy, and the implications will be significant

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  • Jean Pisani-Ferry

    (Peterson Institute for International Economics)

Abstract

For all the long-term benefits of urgently addressing climate change, economic policymakers must plan for a challenging transition to carbon neutrality. Pretending that the costs will be trivial is dangerous. Estimates by the Intergovernmental Panel on Climate Change of the United Nations indicate that emergency action is indispensable to limit catastrophic climate disruption. Because of the magnitude of the efforts involved and the pace of the transformation implied, the accelerated transition to a carbon-neutral economy is bound to have serious, immediate economic implications, warns Pisani-Ferry. Some equipment will lose economic value. Some plants will have to close. Employees will have to be reallocated to other occupations. Investment will have to increase, to repair or rebuild infrastructure and the capital stock. He argues that so far policymakers have not addressed these implications in a systematic manner. It is high time policymakers realize that climate policy is also macroeconomic policy and design transition strategies now.

Suggested Citation

  • Jean Pisani-Ferry, 2021. "Climate policy is macroeconomic policy, and the implications will be significant," Policy Briefs PB21-20, Peterson Institute for International Economics.
    • Handle: RePEc:iie:pbrief:pb21-20
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    File URL: https://www.piie.com/publications/policy-briefs/climate-policy-macroeconomic-policy-and-implications-will-be-significant
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    Cited by:

    1. Coenen, Günter & Lozej, Matija & Priftis, Romanos, 2024. "Macroeconomic effects of carbon transition policies: An assessment based on the ECB’s New Area-Wide Model with a disaggregated energy sector," European Economic Review, Elsevier, vol. 167(C).
    2. Atanas Pekanov & Margit Schratzenstaller, 2023. "Options to Align the EU Fiscal Framework to Green Public Investment Needs," WIFO Research Briefs 2, WIFO.
    3. Dolphin, Geoffroy & Pahle, Michael & Burtraw, Dallas & Kosch, Mirjam, 2022. "A Net-Zero Target Compels a Backwards Induction Approach to Climate Policy," RFF Working Paper Series 22-18, Resources for the Future.
    4. Mark Carney, 2022. "Climate policy is macro policy: 2022 Volcker lecture at NABE conference," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 57(2), pages 43-55, April.
    5. Willi Koll, 2022. "Gesamtwirtschaftliche Stabilität im klimapolitischen Wandel [Macroeconomic Stability in the Climate Policy Transition]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 102(4), pages 288-293, April.
    6. repec:wsr:fiwjag:y:2022:i:005 is not listed on IDEAS
    7. Bettarelli, Luca & Furceri, Davide & Pizzuto, Pietro & Shakoor, Nadia, 2024. "Climate change policies and income inequality," Energy Policy, Elsevier, vol. 191(C).
    8. Angela Köppl & Margit Schratzenstaller, 2022. "Macroeconomic Effects of Green Recovery Programmes. Conceptual Framing and a Review of the Empirical Literature," WIFO Working Papers 646, WIFO.
    9. Kirsch, Florian & Barabas, György & Jessen, Robin & Schmidt, Torsten, 2021. "Projektion der Wirtschaftsentwicklung bis 2026: Mittelfristig nur verhaltene Ausweitung der Wirtschaftsleistung," RWI Konjunkturberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, vol. 72(4), pages 39-50.

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