Climate Change and Monetary Policy: An Evaluation for Turkey

Veysel Karagöl

Abstract: Climate change, which is significantly related to human activities, deeply affects financial and economic activities. The physical risks arising from extreme weather events and gradual global warming as well as the transition risks encountered in adapting to a low-carbon economy create uncertainties and cause supply and demand shocks. These uncertainties and volatilities in economies affect price stability and financial stability and thus make it difficult to implement monetary policy. These facts make essential a new perspective on the possible effects of climate change in the monetary policy strategy. This study, it is aimed to make inferences for monetary policy practices in Turkey by compiling international experiences in the fight against climate change. To mitigate climate risks, the Central Bank of the Republic of Turkey should include the economic effects of climate change in macroeconomic models, encourage green sectors and green bonds, and develop national and global collaborations.

Keywords: Climate change, Climate policy uncertainty, Monetary policy, Green policies, The Central Bank of the Republic of Turkey

Veysel Karagöl
DOI: 10.29224/insanveinsan.1096970
Year 9, Issue 33, Summer 2022

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