Advanced seminar in Economics - Glenn Rudebusch (Brookings Institution, Hutchins Center on Fiscal & Monetary Policy)

Green Stocks and Monetary Policy Shocks: Evidence from Europe

Wednesday 20 November 2024 - 11h00 to 12h30 - General public

Extranef 109 or Online

Policymakers and analysts worry that the capital-intensive investments required for a green transition may be curtailed by higher global interest rates and an increased cost of credit. To examine the claim that green technologies and investments are especially sensitive to interest rate increases, we consider the effect of higher interest rates and unanticipated monetary policy changes on the equity prices of green and brown European firms. We find that in fact brown firms, measured either with CO₂ emission levels or intensities, are affected more negatively than green firms by tighter monetary policy and higher interest rates. Higher interest rates may not skew investment away from a sustainable transition.

Published from 19 August 2024 to 21 November 2024
Jean-Paul Renne
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