Theoretical and Applied Economics
No. 3 / 2025 (644), Autumn
Climate-driven monetary policy: a new Keynesian DSGE analysis for Ghana
Université de Kara, Togo
Mikémina PILO
Université de Kara, Togo
Kounagbè Odilon Boris LOKONON
Université de Parakou, Benin
Abstract. The objective of this research is to analyze the impact of climate change on Ghana monetary policy. To that end, World Development Indicators (WDI) and the Bank of Ghana (BoG) data are used within a New Keynesian Dynamic Stochastic General Equilibrium (NK-DSGE) framework. The results show that rising temperatures increase inflation (0.081-0.083), and reduce output (0.569-5.583%). The BoG may respond by raising the interest rates (0.448- 0.459%) to curb inflation, but growth effects vary with climate shock intensity. Findings stress the need for climate change considerations in monetary policy to balance price stability, growth and for adaptation financing.
Keywords: climate change, monetary policy, DOLS, NK-DSGE, Ghana.
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