By sharing our expertise, we can contribute to a common understanding of how climate change will affect the economy. Policymakers, financial markets and the public thus have the chance to better deal with the uncertainty ahead.
After responding largely successfully to the priority of reducing and stabilising inflation following the 1970s experience, monetary policy now faces a number of new concerns. First, financial cycles are evidently able to destabilise the economy without necessarily implying large inflation fluctuations. Second, the financial system is far from neutral “plumbing” for the real economy.