Macroeconomics Seminar Series. "The New Keynesian Climate Model"
Published: 20 January 2025
27 March 2025. Dr Gauthier Vermandel, Ecole Polytechnique
Dr Gauthier Vermandel, Ecole Polytechnique
"The New Keynesian Climate Model"
Thursday, 27 March 2025. 15:00-16:30
Room 141A, Adam Smith Business School
Abstract
Climate change confronts central banks with two inflationary challenges: climateflation and greenflation. We investigate their implications for monetary policy by developing and estimating a tractable nonlinear New Keynesian Climate model featuring climate damages and mitigation policies for the global economy. We find that mitigation policies aligned with the Paris Agreement result in higher, more persistent inflation than laissez-faire policies. Central banks can attenuate this inflationary pressure by accounting for the rising natural rate of interest, at the cost of lower GDP during the transition. This short-term trade-off ensures long-term macroeconomic stability resulting from a net-zero emission world.
Bio
Gauthier Vermandel is a full-time researcher at Ecole Polytechnique in the Department of Applied Mathematics (CMAP, Institut Polytechnique de Paris). His main research fields are quantitative macroeconomics, climate change, inference of nonlinear structural models, and business cycle theory. He is a consultant for the Banque de France on climate change models, and is in charge of the Environmental Macro research group at the Institute for Macroeconomic and International Policies (i-MIP) hosted by PSE and CEPREMAP.
For further information, please contact business-seminar-series@glasgow.ac.uk.
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First published: 20 January 2025