Register for this Event

We develop an Environmental New-Keynesian model to study the macroeconomic impact of climate policy shocks and which inflation measure is best to target in response to them. We find that the magnitude of adjustments to climate policy shocks and the most appropriate monetary policy response depend on the elasticity of substitution across production inputs and consumption goods. We show that, from a welfare perspective, in the presence of imperfect complementarity and substitutability in consumption and production, targeting headline inflation performs as well as targeting core inflation. Finally, we show that a sudden carbon tax increase transmits as an adverse supply shock, while a transition involving a gradual rise in carbon prices doesn’t necessarily result in higher prices, but does entail significant real adjustments.

Environmental Economics Seminar Series

Every Monday from 4.05 to 5.05 pm in Michaelmas Term

In person details: Manor Road Building Skills Lab - Tea and cake will be served 15 minutes beforehand.

Zoom details: Zoom link

For further information please contact Fulvia Marotta:


Research Themes

Research Programmes