High temperature shocks create monetary policy trade-offs. This column uses a new monthly data set to study how 14 European central banks have responded to abnormally high temperatures in a centennial perspective (1920-2019). High temperature shocks are negative supply shocks to which central banks have reacted by lowering their interest rates. The macroeconomic impact of […]

By increasing the cost of using fossil fuels, carbon taxes should incentivise substitution toward cleaner energy. In practice, firms may shift production and emissions across borders, a problem known as carbon leakage. This column studies carbon leakage in the context of the EU Emissions Trading System using firm-level import data. Following the introduction of the […]