- Investigates the effect of the global financial system and/or the monetary system in fostering a sustainable economy.
- Investigates causes tending to destroy or impair the free-market system.
- Explores and develops market-based solutions.
In this project, Brookings scholars will explore the interaction of monetary policy and changes in carbon taxes in influencing the macroeconomic outcomes in the United States. A significant carbon tax will change the relative prices of different fuels in accordance with their carbon intensity. Depending on how the revenue from the tax is used, it may also increase overall consumer price levels.
Adele Morris at Hutchins Center on Fiscal and Monetary Policy event.
Brookings scholars are focusing on completing the study funded by the previous year's grant, so have not yet started work on this project. The previous grant final deliverable is now due at the end of February 2017. This grant funding has been extended to October 2017.
Our project will directly serve these objectives by exploring how monetary policies can affect the impacts of market-based solutions to climate change. Our work will offer recommendations to guide monetary authorities on how best to respond to potential broader price increases that can result from policies, like a carbon tax, that price greenhouse gas emissions, and it will offer recommendations to fiscal authorities on how the outcomes of a carbon tax could be affected by the response of monetary authorities. This work could thus inform the design of a carbon tax in the United States and other major economies. We will communicate the results to policymakers, stakeholders, and the public through our policy brief on the topic, as well as through meetings, presentations, and related research and scholarly publications.
The primary focus of the analysis will be of a U.S. carbon tax but this work could inform the design of a carbon tax in the United States and other major economies.
(Check sent: 6/7/2016)