Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature

The question of the most effective policy mix for climate change mitigation remains relatively unexplored and is complex given the substantial uncertainties in this topic. It requires an understanding of policy objectives trade-offs and interactions, as well as political economy considerations. This literature review focuses on the roles that macroeconomic and financial policies can play in climate change mitigation, provides a menu of relevant macroeconomic and financial policy tools and instruments, and highlights the complexity of the policy challenge and the need for coordination of different policy areas for achieving mitigation efficiently and effectively.