CENTRAL BANKING: UNCONVENTIONAL POLICIES AND CLIMATE CHANGE
Francesco Maria Drudi, Roberto Rinaldi
Obiettivi formativi
The course analyses the economic implications of climate change on central banks and supervisors.
Prerequisiti
Basic knowledge of monetary economics; mathematics and statistics; econometrics.
Risultati di apprendimento attesi
Knowledge of the framework of monetary policy in the euro area in the light also of the secondary objectives such as climate change.
Contenuti Del Corso
Central bank policies on climate change as a subset of unconventional tools of the instruments of central banks, which are deployed to ensure price stability. It will explore the link between the primary mandate of the central bank and secondary objectives, including climate change. The course will primarily deal with the set of unconventional policies of the ECB and their application in the period since 2007.
Testi Di Riferimento
Material produced by the ECB, IMF, Bank of Italy; academic contributions.
Metodologie Didattiche
Slides, notes for discussions, proposals of topics to be specifically addressed. Presentations.
Modalità di verifica dell'apprendimento
Homeworks, take home exams, class discussions.
Criteri per l’assegnazione dell’elaborato finale
Topics that have been covered in class, in homeworks, exams.
Settimana 1
Review of main topics; organisational issues. Analysis of the functions of the ECB and main instruments. Primary and secondary objectives. General discussion (based on key issues).
Stylized facts on climate change. The policy problem associated to the transition toward net-zero emissions.
Settimana 2
Monetary policy before the great financial crisis. The first phase of unconventional monetary policy (2008-2010): the ‘reparation’ of the transmission mechanism and the ‘separation principle’. Evidence.
Settimana 3
The sovereign crisis: SMP and OMT. How it worked. Evidence from studies. Description of events in the sovereign crisis, including macroeconomic adjustment programmes, analysis of impact of measures. Presentation of 1 group on monetary and fiscal policy in the euro area. General discussion.
Settimana 4
The environment of low inflation after 2012. New wave of unconventional measures (ABS, APP, PEPP), TLTROs, negative rates. How do they work (channel of transmission for each of the instruments).
Settimana 5
Analysis of the econometric evidence. General discussion.
Settimana 6
Analysis of the econometric evidence. General discussion.
Settimana 7
Monetary policy after the strategy review: application of forward guidance, exit from Covid, supply constraints, start of phasing out of non-standard measures, start of the tightening cycle. Evidence on the impact.
Settimana 8
The challenge for monetary policy at the current juncture (short introduction and presentation of 2 groups and general discussion).
Settimana 9
Climate change: facts on trends, externalities, economic costs, and public policies. General discussion.
Settimana 10
Climate change. Impact on financial markets and banks. Financial stability and supervisory policies.
Settimana 11
Climate change related shocks and monetary policy. Potential inflationary shocks of the transition. Physical risk related shocks. (presentation of 1 group)).
Settimana 12
Climate change and monetary policy: support of secondary objectives via asset purchases and collateral policies, risk management and other initiatives. General discussion.