MONETARY POLICY UNDER NATURAL DISASTER SHOCKS

• 成果类型: Article
• 署名作者: Cantelmo, Alessandro; Fatouros, Nikos; Melina, Giovanni; Papageorgiou, Chris
• 署名单位: European Central Bank; Bank of Italy; International Monetary Fund; International Monetary Fund
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12694
• 发表日期: 2024
• 页码: 1441-1497
• 关键词: open-economy; rare disasters; CLIMATE-CHANGE; risk-aversion; rules; inflation; weather; GROWTH; MODEL; CONSEQUENCES

摘要

With climate change increasing the frequency and intensity of natural disasters, what should central banks do in response to these catastrophic events? Looking at IMF reports for 34 disaster-years, which occurred in 16 disaster-prone countries from 1999 to 2017, reveals lack of any systematic approach adopted by monetary authorities in response to climate shocks. Using a small-open-economy New-Keynesian model with disaster shocks, we show that consistent with textbook theory, inflation targeting remains the welfare-optimal regime. Therefore, the best strategy for monetary authorities is to resist the impulse of accommodating in response to catastrophic natural disasters, and focus on price stability.