Today, we are pleased to present a guest contribution written by Filippo Natoli of the Directorate General for Economics, Statistics and Research of the Bank of Italy. The views presented in this note represent those of the author and not necessarily reflect those of the Bank of Italy.
Central banks are debating on how best to make their contribution to the global fight against climate change. I offer insights on how US monetary policy responded to unfavorable economic shocks coming from temperature fluctuations during the last 50 years.
Climatologists and economists all agree: climate change is a threat for future economic performance. The literature has indeed shown that, in recent decades, rising and volatile temperatures had significantly affected countries’ GDP. Although there are significant differences across economies as described in this Econbrowser post, advanced countries like the United States are no exception.
This poses challenges for policymakers. Though monetary