MACROECONOMIC IMPACTS OF THE CIRCULAR TRANSITION: THE GREEN SWANS OF DECARBONIZATION ON THE PATH TO SUSTAINABILITY

Abstract

Abstract. The purpose of the article is to determine the prerequisites for a theoretical rethinking of the problem of price instability and inflation processes as such in the context of a managed green and circular transition as a consequence of the institutional legitimation of climate neutrality on the path to achieving sustainable development. The circular economy, as an important component of the ambitious concept of sustainable development, involves a change in the approach to natural resources, which entails the abandonment of traditional business models and the search for new investment solutions that cannot be fully achieved by attracting private capital. This places great responsibility on governments, which, on the one hand, set ambitious goals (green transition, energy transition, circular transition, sustainable development), and, on the other hand, are not able to respond in a timely manner to the consequences of climate change and to respond to the impacts created by these two factors (institutional pressure and market failures) negative spillover effects. Control of hydrocarbon emissions should be offset by the use of a wide range of green incentives (green quantitative easing policy, green guarantee policy, green subsidy policy) and by providing access to long-term loans as part of responsible government planning. Fiscal, monetary, exchange rate and industrial policies must ensure the sustainability of the green transition. Only in this case can the stability and efficiency of the financial system be guaranteed, as well as the technical re-equipment of the production sector, focused on new technologies, while maintaining its productivity indicators. It has been established that green inflation can occur: as a reaction to irresponsible management (where economic agents actively created such a reality in which environmental degradation and climate problems lead to food, raw material, energy and other crises, which reduces supply, and therefore provokes an increase in prices ); as a reaction to an attempt to implement large-scale projects aimed at decarbonization within a limited time frame (where economic agents and consumers become "victims" of monetary and fiscal policies of governments); as a reaction to the tightening of business standards, for which the end consumer will have to pay (the price of minerals needed for green technologies - from wind turbines and solar panels to electric cars - will require a "green premium" (or "greenium") as due to relatively higher demand on them with limited supply, as well as due to the fact that the extraction of minerals is usually associated with higher environmental costs, which will be "punished" by taxes).