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Cited by 49Sustainable Finance and Green BondsMonetary Policy and Economic ImpactClimate Change Policy and Economics

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Greener and cheaper: green monetary policy in the era of inflation and high interest rates

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Aguila, Nicolás, Wullweber, Joscha·2024·Eurasian Economic Review
DOI 10.1007/s40822-024-00266-y
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Abstract

In recent years central bankers have devoted increased attention to the question of whether and how to intervene to address the growing environmental and climate crisis. The climate intervention debate gained momentum during a period of low inflation and loose monetary policy in core economies – a time characterised by near zero interest rates and large asset purchase programmes. Since 2021, however, the macroeconomic context has changed. Against this background, the paper analyses the contradictory and problematic nature of the direction monetary policy has taken in reaction to higher inflation. It argues that higher interest rates delay the green transformation by raising the cost of sustainable investments, and that the resulting delay also hampers prospects for achieving price stability. The paper concludes that the present macroeconomic environment demands a ‘greener and cheaper’ monetary policy approach designed to address the environmental and climate crisis and also to simultaneously fight inflation.

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Metadata

Authors
Aguila, N., & Wullweber, J.
Affiliations
Witten/Herdecke University (DE)
ORCID
Venue
Eurasian Economic Review
Publisher
Springer Science and Business Media LLC
Published
2024-03
Volume
14
Issue
1
Pages
39-60
ISSN
  • 1309-422X (ISSN-L)
  • 2147-429X
DOI
10.1007/s40822-024-00266-y
OpenAlex
W4392919320
Cited by
49
References
0
Citations by year
2026: 20 · 2025: 16 · 2024: 13
FWCI
17.51
Type
journal article
Language
en
Open access
Licence
Locations
  • Eurasian economic review : (publishedVersion, cc-by)
  • Econstor (Econstor) (submittedVersion, cc-by)
  • RePEc: Research Papers in Economics (submittedVersion)
Funders
Private Universität Witten/Herdecke gGmbH
Topics
  • Social Sciences › Economics, Econometrics and Finance › Finance › Sustainable Finance and Green Bonds
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
Keywords
green monetary policy, climate intervention, inflation, high interest rates, central banking, sustainable investment, green transition, price stability

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Aguila, N., & Wullweber, J. (2024). Greener and cheaper: green monetary policy in the era of inflation and high interest rates. Eurasian Economic Review. https://doi.org/10.1007/s40822-024-00266-y