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Inflation Expectations in the Context of Climate Change and the Green Transition

Working paper 875
Working Papers
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Published: 26 October 2026

By: Gabriele Galati Fulvia Marotta Richhild Moessner Maarten van Rooij

This paper studies how views on climate change shape household inflation expectations. Us-ing a new representative survey of Dutch households, we elicit perceptions of climate change, the green transition and climate policies, and their expected effects on long-run inflation. House-holds expect climate change, the green transition and three types of climate policies – carbon pricing, support for the green transition and support for green innovation – to raise inflation and inflation volatility over the next ten years. Climate change is expected to have the largest effect, while support policies are expected to have the smallest. These results suggest that climate-related beliefs are linked to the anchoring of inflation expectations and that support policies for the green transition and green innovation may facilitate the net-zero transition while keeping in-flation expectations relatively well anchored. We also document significant heterogeneity across households. Expected inflationary effects of climate change are larger among respondents who anticipate more severe global warming and extreme weather. Climate-related inflation concerns are widespread across demographic groups.

Keywords: climate change; green transition; climate policy; inflation; household expectations.
JEL codes E31; E58; Q48; Q54; Q55; Q58.

Working paper no. 875

875 - Inflation Expectations in the Context of Climate Change and the Green Transition

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Research Highlights:

  • Using a new representative Dutch household survey, we examine how climate-related beliefs shape long-term inflation expectations.

  • Dutch households expect climate change, carbon pricing and the green transition to raise long-term inflation and inflation volatility.

  • Climate change is perceived as the strongest inflationary force, with larger expected effects among households who expect more severe global warming and extreme weather.

  • Climate-driven inflation concerns are widespread across demographic groups and linked to inflation-expectation anchoring.

  • Support for green transition and innovation policies may facilitate net-zero goals while keeping inflation expectations relatively well anchored.

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