Hiep Nguyen defends his thesis “Essays on Environmental and Monetary Policy”

The thesis, which consists of three essays, studies the macroeconomic effects of environmental and monetary policies, particularly the implementation of the emissions trading system (ETS) and central bank digital currency (CBDC). It addresses under-researched aspects of these policies, shedding light on their broader economic implications.

The first essay investigates the relationship between the stringency of environmental policy and income inequality. It highlights the key role played by the elasticity of labor supply in this nexus. If labor supply is sufficiently elastic, a stricter policy decreases income inequality.

The second essay looks at the potential impact of ETS on the economic transition in the least developed countries. It offers encouraging insights for these countries: Strict environmental policy might cause only minor delays in their industrialization process.

The third essay examines the potential of CBDC as a monetary policy tool and analyzes how bank market power and its different sources affect CBDC’s monetary policy transmission. The indirect effects via the banking sector could be substantial, depending on the primary source of bank market power.