Climate change may have serious effects on natural rate – ECB paper

The European Central Bank
Annabel Jeffery

Climate change may create considerable additional problems for monetary policy-makers, a working paper published by the European Central Bank says.

In The effects of climate change on the natural rate of interest: a critical survey, Francesco Paolo Mongelli, Wolfgang Pointner and Jan Willem van den End analyse two kinds of model.

The models that central banks use tend not to incorporate environmental effects and most have time horizons of up to five years. They also do not usually explicitly

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