The strong conclusions on the irrelevance of money in the conduct of monetary policy derived from the New Keynesian models are not a consequence of the key and attractive features of those models – the role of expectations and the more solid microfoundations – but they reflect underlying assumptions concerning the role of money and of financial intermediaries in the economy.
However, forests – and more broadly, nature – have so far remained too much in the shadows. Recognising the harm that nature-blind financial flows may cause, and that climate change and environmental degradation are very much related, last month the NGFS published a study on biodiversity and financial stability.