Does the implementation of economic policies connected to climate change depend on monetary policy mandates and financial stability governance structures?

The objective of the proposed research study is to examine how the economic policy mandates and governance frameworks of central banks affect the implementation of climate-related economic measures. Empirical evidence supports a positive correlation between the adoption of climate-related economic policies and a broader mandate for monetary policy. The existing body of research contradicts the idea that an enhanced framework for governing economic stability will result in higher implementation of financial measures related to climate change. The study, which focuses on China from 2015 to 2023, concludes that enhanced economic stability governance, founded on less integrated arrangements, leads to more successful implementation of climate-related financial measures. For other criteria such as central bank independence, the existence of a democratic government, and membership in the Sustainable Banking Network, a positive and statistically significant influence is seen across all specifications. Physical risks associated with climate change, such as heat waves, droughts, floods, and storms, as well as transition risks represented by variables like per-person CO2 emissions, policies aimed at mitigating climate change, and the financial capacity to carry out climate adaptation plans, must also manifest. Even after accounting for a new dependent variable and several alternative model parameters, the findings hold up well. We employ a fixed-effects panel regression approach to control for unobserved heterogeneity and isolate the impact of time-varying variables on renewable energy production. This methodology ensures robust and consistent estimates, providing clear insights into how monetary policy adjustments influence renewable energy investments.