Emanuele Campiglio, together with Irene Monasterolo and Stefan Schmelzer, has obtained a 117,000€ Jubiläumsfonds grant from the Oesterreichische Nationalbank (OeNB) for a project on ‘Smoothing the low-carbon transition. A harmonised policy response to climate-related financial risks’ (abstract below). The project will be managed as part of the Research Area in Climate Economics and Finance and will start in the autumn of 2018.

Description of the project:
The threat of climatic change calls for a rapid transition to a low-carbon society. However, the macroeconomic and financial implications of such system-wide structural shift are still unclear and potentially harmful. Tackling the double challenge of ensuring the transition while avoiding negative socioeconomic implications will require the design and implementation of a comprehensive and coordinated set of policies. However, the assessment tools at the disposal of policy-makers are rarely able to link the macroeconomic, financial and environmental systems in a coherent manner. The aim of the proposed project is thus to build an integrated modelling framework capable of exploring: i) the potential implications of the low-carbon transition on growth, employment, distribution and financial stability; ii) the most appropriate set of policies to minimise climate-related risks, while ensuring a smooth and rapid transition. More specifically, we will develop a stock-flow consistent macroeconomic model with heterogeneous sectors and numerically calibrate it to the Eurozone region. Our model explicitly includes energy as an input factor for the production of consumption and capital goods, as well as a coherent and realistic representation of the banking and financial systems. The structure of the proposed model will allow for a comprehensive analysis of the requirements and implications of fiscal policies, macroprudential regulations and monetary policies designed to support the low-carbon transition.