The methodology for assessing interest-rate policy rules: some comments

This paper is critical of the conceptual foundations and methodology adopted by Smithin (2020) in his exploration of the impact of different interest-rate policy rules on inflation. His modelling framework is too narrow to adequately discriminate between different interest-rate rules in terms of their broader macroeconomic impacts.

Updated nationally determined contributions collectively raise ambition levels but need strengthening further to keep Paris goals within reach

By September 2021, 120 countries had submitted new or updated Nationally Determined Contributions (NDCs) to the UNFCCC in the context of the Paris Agreement. This study analyses the greenhouse gas (GHG) emissions and macroeconomic impacts of the new NDCs. The total impact of the updated NDCs of these countries on global emission levels by 2030 is an additional reduction of about 3.7 GtCO2e, compared to the previously submitted NDCs. This increases to about 4.1 GtCO2e, if also the lower projected emissions of the other countries are included. However, this total reduction needs to be four times greater to be consistent with keeping global temperature increase to well below 2 °C, and even eight times greater for 1.5 °C. Seven G20 economies have pledged stronger emission reduction targets for 2030 in their updated NDCs, leading to additional aggregated GHG emission reductions of about 3.1 GtCO2e, compared to those in the previous NDCs. The socio-economic impacts of the updated NDCs are limited in major economies, while structural shifts occur away from fossil fuel supply sectors and towards renewable electricity. However, two G20 economies have submitted new targets that will lead to an increase in emissions of about 0.3 GtCO2e, compared to their previous NDCs. The updated NDCs of non-G20 economies contain further net reductions. We conclude that countries should strongly increase the ambition levels of their updated NDC submissions to keep the climate goals of the Paris Agreement within reach.