lynx   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/zbw/bubdps/512022.html
   My bibliography  Save this paper

The preferential treatment of green bonds

Author

Listed:
  • Giovanardi, Francesco
  • Kaldorf, Matthias
  • Radke, Lucas
  • Wicknig, Florian
Abstract
We study the preferential treatment of green bonds in the central bank collateral framework as an environmental policy instrument within a DSGE model with environmental and financial frictions. In the model, green and carbon-emitting conventional firms issue defaultable corporate bonds to banks that use them as collateral. The collateral premium associated to a relaxation in collateral policy induces firms to increase bond issuance, investment, leverage, and default risk. Collateral policy solves a trade-off between increasing collateral supply, adverse effects on firm risk-taking, and subsidizing green investment. Optimal collateral policy is characterized by modest preferential treatment, which increases the green investment share and reduces emissions. However, welfare gains fall well short of what can be achieved with optimal emission taxes. Moreover, due to elevated risk-taking of green firms, preferential treatment is a qualitatively imperfect substitute of Pigouvian taxation on emissions: if and only if the optimal emission tax can not be implemented, optimal collateral policy features preferential treatment of green bonds.

Suggested Citation

  • Giovanardi, Francesco & Kaldorf, Matthias & Radke, Lucas & Wicknig, Florian, 2022. "The preferential treatment of green bonds," Discussion Papers 51/2022, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdps:512022
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/268251/1/1830346490.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nicholas Z. Muller, 2020. "Long-Run Environmental Accounting in the US Economy," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 1(1), pages 158-191.
    2. Diluiso, Francesca & Annicchiarico, Barbara & Kalkuhl, Matthias & Minx, Jan C., 2021. "Climate actions and macro-financial stability: The role of central banks," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    3. Hanming Fang & Yongqin Wang & Xian Wu, 2020. "The Collateral Channel of Monetary Policy: Evidence from China," NBER Working Papers 26792, National Bureau of Economic Research, Inc.
    4. Bindseil, Ulrich & Papadia, Francesco, 2006. "Credit risk mitigation in central bank operations and its effects on financial markets: the case of the Eurosystem," Occasional Paper Series 49, European Central Bank.
    5. Robert E. Hall & Ricardo Reis, 2015. "Maintaining Central-Bank Financial Stability under New-Style Central Banking," Economics Working Papers 15109, Hoover Institution, Stanford University.
    6. Fiorella De Fiore & Marie Hoerova & Ciaran Rogers & Harald Uhlig, 2018. "Money Markets, Collateral and Monetary Policy," NBER Working Papers 25319, National Bureau of Economic Research, Inc.
    7. Garth Heutel, 2012. "How Should Environmental Policy Respond to Business Cycles? Optimal Policy under Persistent Productivity Shocks," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 244-264, April.
    8. Erasmo Giambona & Rafael Matta & José-Luis Peydró & Ye Wang, 2020. "Quantitative easing, investment, and safe assets: the corporate-bond lending channel," Economics Working Papers 1722, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2020.
    9. Ulrich Bindseil & Francesco Papadia, 2006. "Credit risk mitigation in central bank operations and its effects on financial markets - the case of the Eurosystem," Occasional Paper Series 49, European Central Bank.
    10. Garth Heutel, 2012. "How Should Environmental Policy Respond to Business Cycles? Optimal Policy under Persistent Productivity Shocks," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 244-264, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. George Economides & Anastasios Xepapadeas, 2025. "Monetary policy stabilization in a new Keynesian model under climate change," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 56, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francesco Giovanardi & Matthias Kaldorf & Lucas Radke & Florian Wicknig, 2023. "The Preferential Treatment of Green Bonds," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 657-676, December.
    2. Francesco Giovanardi & Matthias Kaldorf & Lucas Radke & Florian Wicknig, 2023. "The Preferential Treatment of Green Bonds," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 657-676, December.
    3. Dubois, Loick & Sahuc, Jean-Guillaume & Vermandel, Gauthier, 2025. "A general equilibrium approach to carbon permit banking," Journal of Environmental Economics and Management, Elsevier, vol. 129(C).
    4. Espinosa, Cristian & Gutierrez Cubillos, Pablo & Castro Nofal, Bastián, 2025. "The carbon tax as an automatic stabilizer in a commodity-producing Small Open Economy," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 835-853.
    5. Sandra Batten & Stephen Millard, 2024. "Energy and climate policy in a DSGE model of the United Kingdom," Bank of England working papers 1064, Bank of England.
    6. Stefano Carattini & Garth Heutel & Givi Melkadze, 2023. "Climate Policy, Financial Frictions, and Transition Risk," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 778-794, December.
    7. Eric Jondeau & Grégory Levieuge & Jean-Guillaume Sahuc & Gauthier Vermandel, 2022. "Environmental Subsidies to Mitigate Transition risk," Working Papers hal-04159804, HAL.
    8. Giovanardi, Francesco & Kaldorf, Matthias, 2024. "Climate change and the macroeconomics of bank capital regulation," Discussion Papers 13/2024, Deutsche Bundesbank.
    9. Ferrari, Alessandro & Nispi Landi, Valerio, 2024. "Whatever it takes to save the planet? Central banks and unconventional green policy," Macroeconomic Dynamics, Cambridge University Press, vol. 28(2), pages 299-324, March.
    10. Eric Jondeau & Grégory Levieuge & Jean-Guillaume Sahuc & Gauthier Vermandel, 2023. "Environmental Subsidies to Mitigate Net-Zero Transition Costs," Working papers 910, Banque de France.
    11. Chan, Ying Tung & Ji, Qiang & Zhang, Dayong, 2024. "Optimal monetary policy responses to carbon and green bubbles:A two-sector DSGE analysis," Energy Economics, Elsevier, vol. 130(C).
    12. Punzi, Maria Teresa, 2024. "The role of macroprudential policies under carbon pricing," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 858-875.
    13. Jakob Korbinian Eberl, 2016. "The Collateral Framework of the Eurosystem and Its Fiscal Implications," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 69, April.
    14. Bartocci, Anna & Notarpietro, Alessandro & Pisani, Massimiliano, 2024. "“Green” fiscal policy measures and nonstandard monetary policy in the euro area," Economic Modelling, Elsevier, vol. 136(C).
    15. Jean-Guillaume Sahuc & Gauthier Vermandel & Frank Smets, 2024. "The New Keynesian Climate Model," Working papers 977, Banque de France.
    16. Alessandro Ferrari & Valerio Nispi Landi, 2023. "Toward a Green Economy: The Role of the Central Bank’s Asset Purchases," International Journal of Central Banking, International Journal of Central Banking, vol. 19(5), pages 287-340, December.
    17. Barbara Annicchiarico & Marco Carli & Francesca Diluiso, 2022. "Climate Policies, Macroprudential Regulation, and the Welfare Cost of Business Cycles," CEIS Research Paper 543, Tor Vergata University, CEIS, revised 31 Oct 2022.
    18. Ferrari Minesso, Massimo & Pagliari, Maria Sole, 2023. "No country is an island. International cooperation and climate change," Journal of International Economics, Elsevier, vol. 145(C).
    19. Carattini, Stefano & Kim, Giseong & Melkadze, Givi & Pommeret, Aude, 2024. "Carbon taxes and tariffs, financial frictions, and international spillovers," European Economic Review, Elsevier, vol. 170(C).
    20. Geng, Guangjie & Han, Zhixuan & Wu, Hongli & Cheng, Miao & WANG, RAN & Liu, Huan, 2024. "Collateral policy of the central bank and corporate financing costs: Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 70(C).

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:bubdps:512022. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/dbbgvde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.
    Лучший частный хостинг