How Ought to the Fed Deal With Local weather Change?


Using a wider range of evidence from the United States and Europe, two University of Connecticut political scientists, Lyle Scruggs and Salil Benegal, found that a decrease in climate concerns over that period was caused significantly by poorer economic conditions, which heightened concerns about more pressing problems. In times of scarcity, people think less of a long-term payoff policy.

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Aug. 25, 2021, 8:16 p.m. ET

“The state of the economy affects people’s sensitivity to the future to the present,” said Professor Scruggs. “Historically, climate change has fallen into the same camp as many other environmental problems, where people’s responses with the economy tend to grow and decrease.”

If a central bank can achieve sustained prosperity, this study suggests, it could change some of the policy dynamics in aggressive climate action. Prosperity could support branches of government that are more explicitly responsible for reducing greenhouse gases, building clean energy capacities, or helping communities adapt to more extreme weather conditions.

Not everyone who studies public opinion on the climate agrees.

Anthony Leiserowitz, director of Yale’s Climate Change Communication Program, attributes the decline in climate change concerns in the early 2010s not to the weak economy, but to increasing political polarization and the focus of conservative media on climate change denial.

“What we saw was a symbiotic relationship between conservative media, conservative people’s representatives, and the conservative public,” he said. “That drove the change. It wasn’t the economy. “

An article published this summer by Fed employee Michael T. Kiley analyzed how temperature fluctuations affect economic performance. It concluded that climate change may not change the typical rate of growth of the economy over time, but it could make severe recessions more common. A major crop failure, for example, would directly reduce GDP and at the same time could have economic effects such as bank failures.

And Lael Brainard, a Fed governor and potential Biden chairman, has stressed that the unpredictability of climate change could render the historical models on which economic policy is based obsolete.