Engaging central banks in climate change? The mix of monetary and climate policy

Given the recent debate on role of central banks under climate change, this research theoretically investigates mix monetary and policy provides insights for who are considering their engagement in change issue. The “climate-augmented” is pioneeringly proposed studied. We build an extended Environmental Dynamic Stochastic General Equilibrium (E-DSGE) model as method. By model, we find following results. First, making process should consider existing since it a factor that can influence price level inflation. Second, reaction coefficients traditional rule be better set to enhance welfare when given. This way optimise mix. Third, if typical-form target augmented into rule, dilemma could created. means has some risks care proactively by using narrow (interest rate).