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Full-Text Articles in Social and Behavioral Sciences
Green Transition And Financial Stability: The Role Of Green Monetary And Macroprudential Policies And Vouchers, Ying Tung Chan, Maria Teresa Punzi, Hong Zhao
Green Transition And Financial Stability: The Role Of Green Monetary And Macroprudential Policies And Vouchers, Ying Tung Chan, Maria Teresa Punzi, Hong Zhao
Sim Kee Boon Institute for Financial Economics
This paper analyzes a mix of alternative policies in supporting the green transition and the phase-out of fossil fuels, without compromising financial stability. An environmental dynamic stochastic general equilibrium (E-DSGE) model with two sectors (green and brown) and endogenous default is developed to assess potential climate-induced financial stability threats that can be mainly generated through physical and transition risks mechanism. Those risks are evaluated through a compound capital depreciation shock and a carbon tax shock. The paper offers several findings. First of all, a too stringent carbon tax would increase the medium-term default rate in both sectors, harming financial stability …
Navigating Geopolitical Crises For Energy Security: Evaluating Optimal Subsidy Policies Via A Markov Switching Dsge Model, Ying Tung Chan, Maria Teresa Punzi, Hong Zhao
Navigating Geopolitical Crises For Energy Security: Evaluating Optimal Subsidy Policies Via A Markov Switching Dsge Model, Ying Tung Chan, Maria Teresa Punzi, Hong Zhao
Sim Kee Boon Institute for Financial Economics
This paper aims to provide insights on the design of optimal subsidy policies to enhance energy security amidst energy disruptions triggered by geopolitical conflicts. We introduce a novel Markov switching dynamic stochastic general equilibrium (MS-DSGE) model to address the limitations of existing integrated assessment models in environmental evaluation. These models often fail to adequately consider the environmental and economic impacts of geopolitical conflicts and do not prioritize energy security sufficiently in policymaking. Our application of the MS-DSGE model to the Russia–Ukraine conflict reveals significant decreases in output, social welfare, and energy consumption during disruptions. The mere anticipation of an energy …
Is Fed Policy In The Eye Of The Beholder?, Leo Krippner, Thomas Lam
Is Fed Policy In The Eye Of The Beholder?, Leo Krippner, Thomas Lam
Sim Kee Boon Institute for Financial Economics
While the US Federal Reserve remains vigilant on inflation, it will likely continue its tightening cycle with caution, with an eye on market expectations about future policy actions and financial conditions.
Fomc Playbook: The Only New Game In Town?, Thomas Lam
Fomc Playbook: The Only New Game In Town?, Thomas Lam
Sim Kee Boon Institute for Financial Economics
In light of the Covid-19 pandemic, the Federal Open Market Committee (FOMC), while taking more aggressive actions, seems to have stuck more or less to the standard playbook of responding to “unusual and exigent circumstances”. This essentially calls for slashing conventional policy rates to their effective lower bound, accompanied by forward guidance, embarking on asset purchases, rolling out emergency liquidity facilities and experimenting with lending programmes. But policymakers, with the required US Treasury backstop, have also introduced more creative programmes to encourage credit extension and reached into different market segments.