Green Macroeconomics: Time for a New Paradigm

Abstract

Making macroeconomics fit for a climate-neutral future: The European Union decided to be climate-neutral by 2050 and, hence, become the first climate-neutral continent in the world. Becoming climate-neutral can be considered one of the biggest challenges in our industrial societies. This transition will shape our future tremendously. The invasion of Ukraine further reinforced the necessity to speed up this transition out of geopolitical and moral considerations. Macroeconomic thinking and policies set the incentives for many other policy areas, consumers, firms and other research disciplines. It provides a framework for decisions on which investments will be carried out, which form of energy will be used in the future and how the transition will be financed. We claim it is necessary to make macroeconomics fit for a climate-neutral future. This includes considering climate-related issues in all macroeconomic decisions and discussing the appropriate policy tools to make this transition happen in an efficient and socially fair manner.