by means of carbon taxes, subsidies to green innovation and targeting public procurements at “green” products), while at the same time ensuring social cohesion (by offsetting the impact on low-income households and the unemployed). Fiscal policy should promote sustainable and inclusive growth. However, fiscal positions should remain sound in order to ensure public debt sustainability and to allow for fiscal stabilisation in difficult times.
A sound fiscal position would imply that both automatic stabilisers and discretionary fiscal policies could be used in a recession. Climate change will increasingly gain prominence as a factor of relevance to monetary policy due to its potential to exert multiple impacts on firms, households, banks and, eventually, on the economy at large.