Modelling policy coordination and ecological transition policy

Ecological transition calls for ecological structural change requiring smart and coordinated macroeconomic policies, and this article proposes macroeconomic modelling to provide a baseline analytical framework to tackle this issue. We can define “ecological policies” as all macroeconomic policies aimed at enhancing green productivity by increasing green sectors’ share and green productivity in all sectors, as well as by changing the components of aggregate demand according to green instances. Ecological policy coordination entails integrating traditional monetary and fiscal policies with typical industrial policies. This paper introduces an Eco 3-equation model, showing ecological macroeconomic policies’ positive role in promoting win-win strategies concerning environmental and social sustainability by examining a case study pertaining to energy inflation. This phenomenon is particularly relevant due to recent inflation caused by the hike in energy prices generated by the Ukraine war, which can potentially influence the economy adversely, involving complex monetary and fiscal policy responses.