Monetary-fiscal policy coordination: Lessons from Covid-19 for the climate and biodiversity emergencies

UCL Institute for Innovation and Public Purpose WP 2023/04

33 Pages Posted: 26 Apr 2023

See all articles by Josh Ryan-Collins

Josh Ryan-Collins

UCL Institute for Innovation and Public Purpose

Katie Kedward

UCL Institute for Innovation and Public Purpose

Hugues Chenet

IESEG School of Management; University College London - UCL Institute for Sustainable Resources; Chair Energy and Prosperity

Date Written: April 01, 2023

Abstract

The climate and biodiversity emergencies require structural economic shifts that will necessitate strategic coordination between macroeconomic policy authorities. The Covid-19 episode saw the implementation of monetary-fiscal policy coordination not seen since the 1970s to avert catastrophic damage to economies caused by pandemic-induced lock-downs. Recent developments suggest these were best understood as emergency short-term responses rather than marking a shift in the consensus that insists on a separation between monetary and fiscal policy spheres that might support a more coordinated policy approach to addressing environmental breakdown. We review the most prominent examples of coordination in high income and emerging market economies in the 2020-2021 period, focusing on the creation of fiscal space and targeted provision of liquidity to strategic sectors of the economy. We consider the lessons and opportunities these policy innovations raise for the development of a precautionary macroeconomic policy approach which seeks to reduce the threat of ecological tipping points, prevent catastrophic losses, and support the Net-Zero transition.

Keywords: green transition, climate finance, sustainable finance, monetary policy, fiscal policy, financial stability, Covid-19 pandemic, net-zero transition, climate change, biodiversity loss, central banking, quantitative easing.

JEL Classification: Q54, Q57, E44, E52, E58, E61, E62, E63, G28

Suggested Citation

Ryan-Collins, Josh and Kedward, Katie and Chenet, Hugues, Monetary-fiscal policy coordination: Lessons from Covid-19 for the climate and biodiversity emergencies (April 01, 2023). UCL Institute for Innovation and Public Purpose WP 2023/04, Available at SSRN: https://ssrn.com/abstract=4419077 or http://dx.doi.org/10.2139/ssrn.4419077

Josh Ryan-Collins (Contact Author)

UCL Institute for Innovation and Public Purpose ( email )

11
Montague Street
London, WC1B 5BP
United Kingdom

HOME PAGE: http://https://www.ucl.ac.uk/bartlett/public-purpose/

Katie Kedward

UCL Institute for Innovation and Public Purpose ( email )

11
Montague Street
London, WC1B 5BP
United Kingdom

Hugues Chenet

IESEG School of Management ( email )

Socle de la Grande Arche
1 Parvis de la Defense
Puteaux, Paris 92800
France

HOME PAGE: http://bitly.ws/uN7M

University College London - UCL Institute for Sustainable Resources ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Chair Energy and Prosperity

France

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
203
Abstract Views
756
Rank
283,775
PlumX Metrics