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on Energy Economics |
| By: | Bustamante, Maria Cecilia; Zucchi, Francesca |
| Abstract: | Carbon regulation poses the corporate challenge of developing optimal carbon management policies. We provide a unified model characterizing how firms manage emissions through production, heterogeneous green investment, and the trading of carbon credits. We show that carbon pricing incentivizes firms to reduce emissions through immediate yet transient abatement projects, but has an ambiguous impact on green innovation. In economies where carbon pricing discourages innovation, subsidies to green innovation complement — rather than substitute — carbon pricing, jointly lowering current emissions through abatement projects and accelerating the transition to greener technologies through innovation. |
| JEL: | G30 G31 G12 D62 O33 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21300 |
| By: | Gollier, Christian |
| Abstract: | Within the same sector, technologies yielding larger variable costs are more sensitive to disruptions during a recession. For this reason, assets lower in the merit order should be valued using a larger risk-adjusted discount rate. We characterize the efficient discount rates along the technological merit order in a standard CCAPM framework, and we link them to their option values. We apply our results to the electricity sector in France, showing that the CCAPM beta of fossil electricity is more than twice that of renewable or nuclear electricity. This fossil beta is increasing with the carbon price. We also propose a methodology to measure the value creation of different generation technologies in a given electricity mix by comparing their levelized costs and prices of electricity that take risks and intermittency into account. |
| Keywords: | Energy transition; CCAPM beta; option pricing; carbon price; cost-benefit analysis. |
| JEL: | G12 H43 Q48 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131967 |
| By: | Jonathan T. Hawkins-Pierot; Katherine R.H. Wagner |
| Abstract: | Many governments and institutions use marginal price signals, such as fuel and carbon taxes, to meet emission reduction targets. However, the responses of firms and individuals to these price signals are often calculated using average prices commonly reported in economic data, rather than marginal prices. This paper first documents that the marginal price of electricity paid by U.S. manufacturing plants is 50% lower than the average price. To do so, we construct a novel dataset of both average and marginal electricity prices, and the wedge between these, using plant-level microdata from the U.S. Census and utility-level electricity rate schedules for over two hundred utilities. Second, we provide guidance on when average prices are an appropriate proxy for marginal prices in price elasticities by identifying economic and geographic characteristics that predict variation in this wedge. Overall, the magnitude of this wedge suggests that the standard use of average energy prices to calculate responses to carbon taxes may underestimate the energy price increases needed to meet emissions targets by 50%. |
| JEL: | Q40 Q58 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35406 |
| By: | Sébastien Houde; Wenjun Wang |
| Abstract: | This paper investigates the relationship between AI adoption and carbon emission intensity. Using micro-level data from Chinese firms, we find that carbon intensity decreases following the adoption of AI. The effect is particularly pronounced among large firms, those headquartered in AI hubs, and those in high-carbon intensity sectors. We investigate several mechanisms and find that AI adoption is also associated with increases in energy management processes, green innovation, inventory efficiency, overall productivity, and the share of specialized labor. We find that AI-induced carbon reductions are subject to a large rebound effect of approximately 70%. |
| Keywords: | artificial intelligence, carbon emissions, energy intensity, green innovation |
| JEL: | D22 L11 O33 Q54 Q55 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12803 |
| By: | Ibadoghlu, Gubad |
| Abstract: | This article examines methane emissions policy and climate commitments in Azerbaijan's hydrocarbon-dependent economy, with particular attention to the oil and gas sector, which accounts for the overwhelming majority of the country's greenhouse gas (GHG) emissions. Drawing on national emissions data, international climate commitments, policy documents, and independent assessments, the study evaluates Azerbaijan's progress in methane mitigation and its broader energy transition strategy. The analysis highlights the growing discrepancy between Azerbaijan's climate pledges-including its commitments under the Paris Agreement, the Global Methane Pledge, and various international methane reduction initiatives-and the continued expansion of fossil fuel production and exports. The article argues that methane emissions from oil and gas extraction, transmission, venting, flaring, and aging infrastructure remain a major environmental challenge, while limitations in emissions measurement, transparency, and independent verification continue to undermine the credibility of official reporting. Furthermore, the study examines the environmental and economic risks associated with continued hydrocarbon dependence in a country already experiencing increasing climate vulnerability, including rising temperatures, water scarcity, land degradation, and pressure on agricultural systems. The findings suggest that meaningful methane mitigation will require modernization of energy infrastructure, enhanced monitoring and reporting mechanisms, stronger institutional transparency, and a gradual shift toward renewable energy development. Without substantial structural reforms and a credible decarbonization strategy, Azerbaijan risks falling short of its climate objectives while remaining exposed to the long-term economic and environmental costs of hydrocarbon dependence. |
| Keywords: | Azerbaijan, Methane Emissions, Climate Change, Climate Policy, Greenhouse Gas Emissions, Oil and Gas Sector, Hydrocarbon Economy, Energy Transition, Decarbonization, Global Methane Pledge, Paris Agreement, Methane Mitigation, Energy Governance, Environmental Sustainability, Renewable Energy, Gas Flaring, Venting Emissions, Climate Vulnerability, COP29, SOCAR |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:341547 |
| By: | Joseph Majkut |
| Abstract: | The United States’ energy strategy must bridge economic policy and geopolitical power, while offering a calibrated response to climate change. While the country experienced two decades of relatively constant energy consumption, it now faces a surge in power demand driven by artificial intelligence, domestic manufacturing, and continued electrification. These developments challenge an already-constrained domestic electricity grid with limited spare capacity. This paper argues that a renewed strategy should motivate new action to increase energy supply, build infrastructure, and approach greenhouse-gas emissions reductions with competition in mind. Appropriate actions include expanding the development and deployment of nuclear energy, investing in improvements to the high-voltage interstate transmission system, building new natural-gas plants capable of being later retrofitted with carbon capture equipment, and establishing rigorous carbon-accounting standards. |
| Keywords: | energy economics, industrial policy |
| Date: | 2025–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:cxx:wpaper:an-energy-strategy-for-national-renewal |
| By: | Bourlés, Renaud; Laurent-Lucchetti, Jérémy; Rochet, Jean-Charles |
| Abstract: | Ten years after COP21, carbon emission trajectories remain far above the 1.5 ° C threshold, due to lack of international consensus. Breaking from cost-benefit approaches, we assess the maximum reduction in carbon emissions that could be accepted by all countries. We characterize the consistent target mechanism that minimizes global emissions subject to the participation constraint of each country. The mechanism can be implemented either via a uniform carbon tax or as a cap–and–trade system. Calibrated to data from 69 countries, including GDP, carbon intensities, and observed tax rates, our model suggests – for our baseline scenario – that a uniform carbon price of $250 per ton would be politically acceptable by all countries. It could reduce global emissions by 35%, but would require unprecedented international transfers: up to 3% of world GDP, with a large redistribution from high-income, low-emission countries to carbon-intensive emerging economies. Our analysis highlights the structural ambition gap imposed by voluntary cooperation and identifies two levers to overcome it: convergence in green technologies and stronger political support for mitigation. Without progress in these dimensions, international climate policy remains constrained to deliver only modest results. |
| JEL: | Q54 Q58 F55 H23 C73 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20863 |
| By: | Fabra, Natalia; Llobet, Gerard |
| Abstract: | This paper examines how buyer counterparty risk—arising from the possibility that buyers renegotiate long-term contracts under the threat of default—distorts market efficiency. We develop a theoretical model showing that the prospect of renegotiation raises contract prices, further increasing the likelihood of renegotiation, and depresses investment. We then assess several policy interventions to promote contract liquidity in the presence of buyer counterparty risk, including public subsidies, financial guarantees, and collateral requirements. While these tools can mitigate price distortions and stimulate investment, they also introduce trade-offs such as moral hazard, reliance on costly public funds, or demand reductions. These insights are particularly relevant in sectors with capital-intensive, long-lived assets exposed to price volatility, notably in electricity markets, where underinvestment in renewable generation may slow down the energy transition and hinder decarbonization goals. Finally, we simulate the Spanish electricity contract market for solar PV to quantify the model’s predictions. |
| Keywords: | Dynamic contracts |
| JEL: | L13 L94 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21261 |
| By: | Llavador, Humberto; Roemer, John E; Stoerk, Thomas |
| Abstract: | The Paris Agreement is designed to increase climate ambition gradually through a process of ratcheting up. What is the plausible endpoint of this process? We develop a tractable integrated assessment model in which countries interact through a decentralized general equilibrium and negotiate unanimously over a global carbon budget, with all mitigation implemented via a global carbon price. We prove existence and uniqueness of a unanimous international agreement on global emissions, in which carbon pricing revenues are redistributed across countries in proportion to marginal climate damages. In a quantitative application for 154 countries, the resulting equilibrium limits global mean surface temperature change to 1.51C, at a carbon price of 320 USD/tCO2. The associated international transfers of carbon pricing revenue are progressive toward lower-income countries and amount to about 0.8% of global GDP annually - an order of magnitude larger than the Paris Agreement’s climate finance target. |
| Keywords: | Paris agreement; Climate policy; International environmental agreements; Climate change |
| JEL: | Q54 Q56 Q58 F35 F53 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20991 |
| By: | Junjie Lin (Sun Yat-sen University); Cheng Keat Tang (Nanyang Technological University); Jos van Ommeren (Vrije Universiteit Amsterdam) |
| Abstract: | Electric vehicles (EVs) are typically 20% heavier than conventional internal combustion engine vehicles because of their dense battery packs and reinforced structures. While this additional mass shields EV occupants, it transfers disproportionately greater kinetic energy to other road users during collisions, exacerbating their injury severity. Here, we quantify this critical safety disparity using data from over 300, 000 two-vehicle collisions in California. We find that driving an EV reduces the occupant’s risk of serious injury or fatality by 18%. However, it significantly elevates the corresponding risk for occupants of colliding vehicles by 13%—an effect driven almost entirely by vehicle weight. Economically, these externalized accident costs offset approximately one-third of the environmental climate benefits of EVs, indicating that while EV adoption still yields a net gain in social welfare, it introduces profound safety inequities. As vehicle electrification accelerates globally to mitigate climate change, our findings highlight an urgent need for policies regulating fleet weight to ensure equitable road safety. |
| Keywords: | Police Killings, Underreporting, Medico-legal death investigation office |
| JEL: | D62 R41 |
| Date: | 2026–05–21 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260025 |
| By: | Katarzyna Maciejowska |
| Abstract: | Battery energy storage systems (BESS) are expected to play an important role in electricity markets with increasing shares of renewable generation. While existing research has primarily focused on price arbitrage and ancillary services, the role of grid fees in shaping BESS operation and profitability remains insufficiently understood. This article investigates how different levels of distribution fees affect the scheduling and economic viability of BESS in the day-ahead electricity market. The analysis employs a mixed-integer linear programming model of BESS operation combined with electricity price data from the German market. Four system configurations are considered: stand-alone storage and BESS combined with consumption, generation, or both. The value of storage is measured as the difference between system profits with and without BESS. In addition, a rolling-horizon optimization framework is used to evaluate the impact of forecast uncertainty and decision horizon length on operational outcomes. The results show that grid fees significantly influence both BESS profitability and operational strategies. For stand-alone storage, higher transmission charges reduce arbitrage revenues and battery utilization. When BESS is integrated with consumption and generation units, load shifting and self-consumption become the dominant sources of value, leading to a non-monotonic relationship between grid fees and storage profitability. These findings highlight the importance of considering tariff structures when evaluating storage investments and designing regulatory frameworks for electricity markets with increasing flexibility needs. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.22185 |
| By: | Vincent Bertrand (Université Marie et Louis Pasteur, CRESE UR3190, F-25000 Besançon, France); Louis Malissard (Université Marie et Louis Pasteur, CRESE UR3190, F-25000 Besançon, France) |
| Abstract: | This article offers a literature review on the system of certificates for attributing sources of decarbonized electricity generation, with a particular focus on how temporal matching rules between certificate consumption and production affect their consequential performance in reducing emissions. First, we explain how the electricity attribution certificates (EAC) system operates, describing its annual functioning and carbon accounting implications. Second, we identify how consumption’s motivations for attribution under the annual system led to new decarbonization ambitions justified by a switch to hourly matching practices. Also driven by the 24/7 Carbon-Free Electricity (CFE) procurement initiative, which combines temporal, regional, and additionality matching criteria, a growing body of literature has established a consequential modeling framework for the power system of each potential matching system. Drawing from this targeted corpus, we compare the effects of annual, hourly, and 24/7 CFE initiatives in terms of emissions reductions, transformation of the electricity mix, and induced costs. On the one hand, we note that the literature converges on the limited ability of annual matching to generate structural system impacts and additional emissions reductions. On the other hand, literature models significant environmental benefits from the 24/7 CFE procurement initiative, which more strongly directs investment toward decarbonized technologies available during residual hours of variable renewable generation, thereby reducing reliance on fossil fuels. However, we find that none of the studies isolate the effect of a standalone hourly-matching reform. Moreover, we highlight the limitations of the modeled results, including modeling assumptions, additional induced costs, and alignment with the attribution market architecture. This work illustrates a trade-off between a low-cost annual mechanism and a costly new market for 24/7 CFE procurement, contributing to the ongoing discussion on potential reform of the GHG Protocol. |
| Keywords: | Electricity Attribution Certificates (EAC), Matching rules, Consequential effects, Granularity, Annual matching, Hourly matching, GHG emissions. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:crb:wpaper:2026-05 |
| By: | Gerlagh, Reyer; Liski, Matti; Vehviläinen, Iivo |
| Abstract: | When demand aggregates both price-sensitive and price-insensitive behaviors, uniform pricing becomes a deficient market design that generates negative surplus during extreme-price events. We develop a price-control mechanism that efficiently resolves the tradeoff between protecting consumers and limiting rents. The mechanism implements a dynamic price cap that responds to demand adjustments and induces truthful supply through incentive payments. In a quantitative application to the French wholesale electricity market during the 2022–2023 energy crisis, the mechanism would have lowered expected procurement costs by roughly €200 billion, about two-thirds of total projected costs in this central scenario. |
| Keywords: | Price controls; Market efficiency; Energy prices |
| JEL: | D45 D61 Q41 Q48 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20971 |
| By: | Fabra, Natalia |
| Abstract: | As Spain approaches the first scheduled nuclear retirements – most notably, Almaraz in 2027 – the debate over the implications of delaying the nuclear phase-out has reopened. This paper uses detailed simulations of the Iberian electricity market to assess the consequences of postponing Almaraz’s closure on wholesale electricity prices, renewable and storage profitability, and power-sector CO2 emissions. We test the robustness of our findings to alternative investment targets, electricity demand paths, and gas marginal costs. We caution against a purely static assessment: while extending Almaraz, holding everything else equal, lowers prices and emissions by displacing gas, it also depresses renewables’ captured prices and increases curtailment, weakening incentives to invest in renewables and storage. If the investment response is large enough, a delayed nuclear phase-out may ultimately lead to higher prices and higher emissions. This article was prepared as the Presidential Address for my term as President of the Spanish Economic Association (2023–2024). I thank Lorenzo Cattabriga, Ã lvaro Oballe, Elena Parra for their outstanding research support. Fabra has benefited from generous funding by the European Union (ERC grant \textit{ENERGY-IN-TRANSITION}, 101142583). At the time of writing, Natalia Fabra is an independent board member of Redeia. Views and opinions expressed are, however, those of the author only and do not necessarily reflect those of the European Research Council or Redeia. Neither of them can be held responsible for the results reported in this paper. The author declares that this work has been carried out independently, and that she has no financial or personal conflicts of interest that could have influenced the findings reported in this paper. |
| Keywords: | Electricity markets |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21053 |
| By: | Couttenier, Mathieu; Rohner, Dominic |
| Abstract: | The world faces a twin crisis of surging armed conflicts and climate change. As discussed in the current article, while the much-needed green energy transition and de-carbonization of our economies represents great opportunities for fostering peace, it also bears significant risks linked to the scramble for critical minerals. In the current piece we take stock of the evidence linking minerals to civil and interstate conflicts and propose several evidence-based policies that allow to capture a "double dividend" of going green: saving planetary health and reducing armed conflicts. |
| Keywords: | Climate change |
| JEL: | D74 F51 N40 Q34 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20881 |
| By: | De Jonghe, Olivier; Mulier, Klaas; Schepens, Glenn; Stimpfle, Leonard |
| Abstract: | We show that an unexpected tightening of the EU Emissions Trading System led high-emission-intensity firms to cut emissions relative to low-intensity peers within the same industry, without reducing output, thereby improving emission efficiency. Effects are stronger for power producers than for manufacturing firms. Examining mergers and acquisitions (M&As), we find that high-intensity manufacturing firms acquire more green targets after the tightening than low-intensity firms, with no change in the overall number of acquisitions, indicating a shift in focus rather than activity. Finally, we show that these green M&As contributed to the observed emission reductions over the study period. JEL Classification: D22, G34, G38, Q53, Q54 |
| Keywords: | climate regulation, emission trading, firm behavior, M&A |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263253 |
| By: | Dugoua, Eugenie; Moscona, Jacob |
| Abstract: | This chapter examines the economics of climate innovation and its role in the clean technology transition. It outlines the incentives, market failures, and policy levers that shape the development and diffusion of clean technologies; traces global patterns in technology development and deployment; and highlights frontier challenges and open questions related to climate adaptation, critical mineral supply chains, artificial intelligence, and geopolitics. The analysis explores the role of effective climate policy, stressing the relevance of coordinated approaches that match instruments to technology maturity and local context. |
| Keywords: | Innovation |
| JEL: | O3 Q5 O13 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20853 |
| By: | Alice Mantegazza (Nova Economics Club); Edoardo Santiago Longo (Nova Economics Club); Gonçalo Filipe Mendes Novo (Direção-Geral da Economia); Nuno Filipe Jesus tavares (Direção-Geral da Economia) |
| Abstract: | This paper examines the relationship between electricity exposure and firm-level investment dynamics in Portugal over the period 2006–2023. Using comprehensive administrative microdata covering the universe of manufacturing firms, we construct a firm-level measure of electricity intensity defined as electricity expenditure relative to sales and estimate fixed-effects panel regressions exploiting within-firm variation over time. We document three main findings. First, electricity intensity is robustly and negatively associated with investment: firms that are more dependent on electricity inputs exhibit systematically lower capital accumulation, conditional on firm characteristics and macroeconomic conditions. Second, the elasticity between electricity use and investment weakens during the period of elevated electricity price volatility beginning in 2021, indicating a dampening of capital formation responsiveness under heightened input cost uncertainty. Third, firms classified as energy-intensive under the European Commission’s 3 percent regulatory threshold do not exhibit statistically significant differences in investment dynamics during the post-2021 period.The results suggest that investment behavior varies along a continuous exposure margin rather than across binary regulatory classifications. Overall, the findings highlight the importance of granular firm-level measures of electricity dependence in understanding capital accumulation patterns during periods of energy market volatility. |
| Keywords: | Electricity exposure; firm investment; energy price volatility; panel microdata; Portugal |
| JEL: | D25 Q43 C23 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:mde:wpaper:192 |
| By: | Gu, Grace; Hale, Galina; Sharma, Bhavyaa; Wu, Jinhong |
| Abstract: | Do banks help or hamper green transition? To answer this question, we analyze the dynamics of bank lending to firms in the US, EU, and separately Denmark in relation to the borrowers' emissions of CO2. We evaluate the allocation of bank loans across industries and within industries across firms, allowing for heterogeneity of firm emissions and changes in these emissions. To facilitate green transition, bank lending needs to flow to greener and greening firms, but not out of high-emission industries that need funding to transition to cleaner production methods. Using syndicated loan data, we find that for US borrowers, bank lending was likely hampering green transition, while in the EU bank lending is more likely to facilitate it. Zooming in on Denmark, for which we have data on the full universe of firms and banks, we find more significant credit reallocation to greener firms, especially within industries. However, the reallocation of funds to green firms is, to a large extent, a byproduct of green firms becoming bigger. We do not find any evidence consistent with banks active stewardship of green transition. |
| JEL: | G21 F21 Q54 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20993 |
| By: | Hassan Benchekroun (McGill University); Simon Elgersma (Rijksuniversiteit Groningen); Gerard van der Meijden (Vrije Universiteit Amsterdam); Cees Withagen (Vrije Universiteit Amsterdam) |
| Abstract: | We study how market power, leadership, and commitment affect oil extraction and climate outcomes in a cartel-fringe model with renewables and a backstop technology. Comparing competitive, Nash-Cournot, open-loop, and feedback von Stackelberg equilibria, we show that market power and leadership can either increase or reduce climate damages, depending on commitment, cost and emission factor heterogeneity, and relative resource stocks. In a benchmark with a social cost of carbon of 250 USD/tC, market power without leadership lowers climate damages by 3.9 trillion USD relative to perfect competition. With leadership, these gains fall to 3.1 trillion USD when the leader can commit and to 2.6 trillion USD without commitment. Small changes in resource stocks, cost parameters, or climate policy can trigger regime shifts with discontinuous welfare and climate effects. Carbon taxes and backstop subsidies can remove sequencing distortions but may weaken the conservation effect of market power. When the cartel cannot commit, the second-best carbon tax lies well below the Pigouvian level yet often delivers near-first-best welfare. Finally, we show that market power and leadership may reduce cartel profits. |
| Keywords: | cartel-fringe, climate policy, renewables, dynamic game, von Stackelberg equilibrium |
| JEL: | C72 Q30 Q38 Q42 |
| Date: | 2026–06–11 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260030 |
| By: | Yan MA; Morihiro YOMOGIDA |
| Abstract: | We study whether carbon tariffs can prevent emissions leakage which occurs when firms relocate production across countries. We extend a segmented market model of international trade to a North-South setting with polluting firms. A northern firm may relocate its plant to the South to avoid the higher carbon costs imposed on its domestic production relative to those on its offshored production. To prevent emissions leakage through the firm's relocation, the North can adopt a carbon tariff and an export rebate that can offset its gap in carbon taxes with the South. We find that the North’s carbon tariff and export rebate prevent emissions leakage, which causes an increase in global emissions, if the northern firm uses less emissions-intensive technology relative to the southern firm and its emissions intensity exceeds fifty percent of that of the southern firm. However, if the northern firm’s emissions intensity is less than fifty percent of that of the southern firm, the North’s carbon tariff fails to prevent emissions leakage even with its export rebate. We also find that the North’s optimal carbon tax regime includes its carbon tariff and export rebate. Furthermore, we show that the North's optimal carbon tax regime actually benefits the South through a reduction in global emissions. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26053 |
| By: | Gregor Semieniuk (University of Massachusetts) |
| Abstract: | Industrialization is key for economic development but how it interacts with climate change mitigation is insufficiently understood. However, this relationship is important for scenarios of climate change mitigation, such as reviewed by the International Panel for Climate Change (IPCC), that seek to show pathways for simultaneous economic development and mitigation in the coming decades. This paper examines the hypothesis that industrialization tends to go hand in hand with a rising energy intensity of GDP (energy/GDP). Analysis of 16 development successes in the 19th, 20th and 21st century shows that all relied on structural change toward manufacturing almost universally accompanied by a growing energy intensity of GDP for decades. In contrast, all scenarios in the most recent assessment report by the IPCC project historically unprecedented, fast GDP growth for the (least industrialized and affluent) Africa region out to 2050, but with a fast-falling energy intensity, at odds with any historical development experience. The underlying models arrive at these implausible growth trajectories by relying on an assumption of automatic income convergence of low-income to high-income countries, without explaining how it is achieved or conditioning energy demand. If economic growth is indeed going to be as successful as projected, climate models may be underestimating the future demand for energy in developing countries and the effort it takes to decarbonize. Or conversely, if the projected reduction in energy use is in fact materializing, then much lower GDP growth rates are likely. |
| Keywords: | industrialization, structural change, climate change mitigation, energy intensity, decoupling, integrated assessment models |
| JEL: | N10 N70 O14 O47 Q43 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:imk:wpaper:228-2026 |
| By: | Xu, Yongdeng (Cardiff University, Cardiff, UK); Lyu, Juyi (Loughborough University, UK); Lu, Wenna (Cardiff Metropolitan University, Cardiff, UK) |
| Abstract: | This paper evaluates an Adaptive LASSO-MGARCH model for multivariate volatility forecasting, with an application to green and conventional bonds, equities, energy commodities, and EU carbon allowances. By introducing coefficient-specific adaptive penalisation directly into the multivariate GARCH variance equations, the model delivers a sparse and data-driven volatility spillover structure while preserving positive definiteness of the conditional covariance matrix. Using daily data on green and conventional bonds, equities, energy commodities, and carbon allowances, we show that adaptive regularisation substantially reduces model complexity and improves economic interpretability relative to an unpenalised MGARCH benchmark. Out-of-sample forecasting experiments at multiple horizons demonstrate that the Adaptive LASSO-MGARCH model consistently achieves lower covariance forecast losses, and statistical tests based on the White reality check confirm that these improvements are significant across alternative loss functions. |
| Keywords: | Adaptive LASSO; Multivariate GARCH; Volatility Forecasting; High-Dimensional; Green Finance |
| JEL: | C32 C58 G17 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cdf:wpaper:2026/4 |
| By: | Douenne, Thomas; Dyrda, Sebastian; Hummel, Albert Jan; Pedroni, Marcelo |
| Abstract: | How should governments design climate policies in the presence of inequality, uninsurable risk, and fiscal constraints? To address this question, we develop a climate—economy model with incomplete markets and idiosyncratic labor-income risk, where Ricardian equivalence fails and optimal long-run capital taxes are positive. We analytically show that the optimal carbon tax equals the social cost of carbon (SCC) adjusted for fiscal distortions. Calibrating the model to the U.S., we show that these deviations are quantitatively negligible: high levels of household inequality, income risk, and fiscal distortions do not, in themselves, justify lowering climate ambitions. Welfare gains under the optimal policy come almost entirely from efficiency and environmental amenities, with almost no effect on redistribution and insurance, and are fairly evenly distributed across households. |
| Keywords: | Climate policy; Carbon taxes; Optimal taxation; Heterogeneous agents; Incomplete markets |
| JEL: | E62 H21 H23 Q5 D52 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20820 |
| By: | Raimi, Daniel (Resources for the Future); Cilento, Christina (Resources for the Future); Kaufman, Noah |
| Abstract: | As oil- and gas-producing communities across the United States grapple with uncertain economic futures, valuable lessons can be drawn from the region where the modern petroleum industry was born.This report is the fifth in a series exploring the strategies US oil- and gas-producing regions may pursue in building economic resilience to a changing energy landscape. While oil- and gas-producing communities face both short- and long-term economic risks—from price volatility to the rise of alternative energy sources—relatively little policy attention has focused on strategies that can help these communities boost their economic resilience.Here, we present lessons learned from research and stakeholder interviews in the “Oil Region” in northwestern Pennsylvania, namely the region’s three largest cities: Oil City, Franklin, and Titusville. Once the hub of oil production in the United States (with an oil boom that began in 1859), the region saw a steady decline in oil activity across the twentieth century. The Oil Region’s ongoing economic evolution offers valuable insights both for communities whose economies today rely on oil and gas extraction, as well as for state and federal policymakers seeking to support similar communities’ economic development. |
| Date: | 2026–07–15 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-26-10 |
| By: | Känzig, Diego; Williamson, Charles |
| Abstract: | We explore the increasing divergence between economic growth and energy consumption through energy-saving technical progress. Proposing a new measure of energy-saving technology, we study the underlying drivers in a semi-structural model of the U.S. economy. Our analysis shows that energy price shocks reduce consumption and stimulate energy-saving innovation, but also cause economic downturns and crowd out other innovations. Only energy-saving technology shocks can explain the negative co-movement between output and energy use. These sudden efficiency gains emerge as the primary driver of energy-saving technical change. Our findings highlight the importance of fostering energy-saving innovations in transitioning to a low-carbon economy. |
| Keywords: | Directed technical change |
| JEL: | E0 O30 Q32 Q43 Q55 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20866 |
| By: | Lena Wiest; Klas Wetterberg; Max Skoczylas; Elisa Lanzi |
| Abstract: | Carbon credit markets are flexible tools that can incentivise greenhouse gas mitigation at different scales. Historically, most carbon credits have been generated at the project level, but crediting approaches at larger scales are emerging. These approaches can operate across entire jurisdictions, sectors or policies, placing governments at the centre of the crediting approach. This enables a wider range of mitigation efforts, including government strategies, policies and enforcement. For scaled-up crediting to effectively support climate change mitigation, approaches must be designed and implemented with a high level of integrity. This paper examines key integrity considerations in scaled-up crediting, with a focus on environmental integrity in jurisdictional forest crediting. The analysis highlights that scaled-up crediting can help address certain integrity risks associated with project-based crediting, but considerable methodological and implementation challenges remain. The paper presents strategic considerations for donor governments to help ensure that scaled-up crediting approaches become more effective tools for climate change mitigation. |
| Keywords: | Article 6, carbon credit markets, climate change mitigation, co-operative approaches, environmental integrity, greenhouse gas emissions, integrity, jurisdictional, Paris Agreement, policy-based, REDD+, scaled-up crediting, sectoral, social integrity |
| JEL: | F55 G14 H23 Q52 Q54 |
| Date: | 2026–07–17 |
| URL: | https://d.repec.org/n?u=RePEc:oec:envaaa:276-en |
| By: | Rieger, Jonas; Muñoz, Felipe; Grönberg, Lars; Lange, Kai-Robin; Ojeda-Pereira, Iván; Briceño, Dario; Nass, Christian; Stahl, Carsten; Cassola, José; Rojas-Córdova, Carolina |
| Abstract: | Understanding the construction of socio-environmental narratives at a national scale is a complex challenge, particularly when research remains fragmented across disconnected case studies. In Chile, the energy transition has generated territorial disputes as extractive industries and renewable energy projects expand, yet large-scale systematic analyses of how these conflicts are represented in public discourse remain scarce. This paper addresses this gap by applying a spatio-temporal topic modelling framework to a corpus of 1, 996 validated news articles covering conflicts related to the energy transition in Chile from 2011 to 2025. Using RollingLDA, a dynamic adaptation of latent Dirichlet allocation that prevents information leakage from future documents, we identify twelve topics that provide insights into the public narratives surrounding socio-environmental conflicts. Our analysis reveals how specific conflicts, such as the HidroAysén dam project, the Dominga mining controversy, and pollution in sacrifice zones such as Quintero-Puchuncaví, have evolved over time, with some narratives declining while others, including green hydrogen development and lithium extraction, have emerged as central concerns. We complement this temporal analysis with a spatial dimension by mapping the prevalence of topics across Chilean regions through an interactive dashboard. By combining established methods, our work offers a reproducible framework that can be adapted to topic modelling results incorporating spatial and temporal dimensions, enabling the tracking of how socio-environmental narratives emerge, evolve, and fade over time. Please also refer to the GitHub repository at https://github.com/JonasRieger/t2s2026. |
| Date: | 2026–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:xqn3f_v1 |
| By: | Filipp Ushchev; Guntram Wolff |
| Abstract: | We develop a new model for green investments which blends features of the portfolio choicemodel and the non-cooperative private provision of pubic goods game. Agents differ in timepreference and in economic size. Our model shows that (a) long-term investors tend to have alarger share of their portfolio in green bonds, (b) larger agents/economies tend to invest morein climate mitigation, and (c) more heterogeneity among the types of agent (both in termsof time preference as well as economic size, looking beyond thresholds) increases aggregateclimate investments. We provide empirical evidence for the first two effects. Our model hassignificant implications for climate policy: it points to the importance of long-term investors inthe green transition and to the importance of larger groups of countries agreeing on cooperativeframeworks, for example, in the form of climate clubs, to increase overall investments in climatemitigation. |
| Keywords: | Public goods game; portfolio choice model; green investment; greenium |
| JEL: | H41 C72 Q54 Q58 G11 |
| Date: | 2026–07–08 |
| URL: | https://d.repec.org/n?u=RePEc:eca:wpaper:2013/410034 |
| By: | Omar Chisari; Antonio Estache; Juan Ignacio Mercatante |
| Abstract: | This paper analyses the potential transitional direct and indirect macroeconomic impacts of an electricity price increase due to the entry of new large data centers in an economy without excess energy capacity. It tracks the short term distributional, employment, fiscal, sectoral and growth effects of the associated electricity demand shock, if the prevailing electricity price regulation remains unchanged. The quantitative analysis is based on a computable general equilibrium model calibrated for Argentina. The simulations suggest that the failure to adjust the pricing regulation could lead to a short run output drop in the industrial and service sectors. This would increase unemployment and worsen income distribution since the shock hurts less the highest income class in relative terms. |
| Keywords: | Computable General Equilibrium Models; Data Centers; Electricity; Pricing; Regulation; Incidence |
| JEL: | C68 D58 E16 E20 E60 H12 H22 L11 L50 L94 O11 O32 Q40 |
| Date: | 2026–07–05 |
| URL: | https://d.repec.org/n?u=RePEc:eca:wpaper:2013/411995 |
| By: | de Silva, Tiloka; Tenreyro, Silvana |
| Abstract: | We study countries' compliance with the targets pledged in international climate-change agreements and the impact of those agreements and specific climate laws and policies on greenhouse-gas emissions and economic outcomes. To do so, we compile and codify data on international agreements and measures enacted at the national and sub-national levels. We find that compliance with targets has been mixed. Still, countries that signed the Kyoto Protocol or the Copenhagen Accord experienced significant reductions in emissions when compared to non-signatories. Having quantifiable targets led to further reductions. Effects from the Paris Agreement are not yet evident in the data. Carbon taxes and the introduction of emission-trading schemes led to material reductions in emissions. Other climate laws or policies do not appear to have had, individually, a material effect on emissions. The impact on GDP growth or inflation from most measures was largely insignificant. Overall, much more ambitious targets would be needed to offset the impact of economic and population growth on emissions and contain the expansion of the stock of gases. |
| Keywords: | Emissions; Climate change; Climate agreements; Carbon taxes; Emission-trading schemes |
| JEL: | Q54 O44 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21018 |
| By: | Brzezinski, Adam; Garicano, Luis |
| Abstract: | Political narratives on climate policy have turned more skeptical despite mounting evidence of climate urgency. We explain this shift with a theory of narrative entanglement: to appeal to voters, politicians intertwine economic and environmental narratives rather than treating them separately. Hence, shocks unrelated to climate change can impact environmental narratives. We test our theory in the context of Russia’s invasion of Ukraine, which affected the economic costs of the European Green Deal without changing its impact on emissions. We use large language models to identify climate narratives across all speeches in the 9th European Parliament (2019-2024). Exploiting only variation within each parliamentarian, we show that after the invasion, narratives become both more negative in the cost assessments of climate policies and more skeptical about their environmental impact. |
| Keywords: | Narratives |
| JEL: | D72 D91 Q58 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20829 |
| By: | van der Ploeg, Frederick; Rezai, Armon |
| Abstract: | A review is presented of the macroeconomics of climate change and policy. The review starts with a tractable workhorse model of the macroeconomics of climate and carbon pricing. It then discusses extensions to multiple countries. A discussion of the effects of macroeconomic and climate uncertainties and tipping points on asset pricing and the carbon price is given, including a discussion of stranded assets and the run on oil. Attention is then paid to green technical progress and to the effects of climate change and climate policy on different generations and the income distribution. The review concludes with a discussion of the effects of climate shocks and carbon pricing shocks on unemployment, inflation, and the role of networks in the transmission of these shocks, and borrowing constraints and sovereign risk in the face of climate shocks. |
| Keywords: | International cooperation; Uncertainty; Distribution |
| JEL: | Q58 G12 E32 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21153 |
| By: | Panizza, Ugo; Shi, Shuyang; Weder di Mauro, Beatrice; Gulati, Mitu |
| Abstract: | This paper investigates the existence, magnitude and drivers of the sovereign greenium: the yield discount on sovereign and quasi-sovereign green bonds relative to conventional bonds. Using a dataset of 332 matched pairs of green and conventional bonds issued between 2014 and 2023 by sovereigns, sovereign-backed agencies, and multilateral development institutions, we analyze secondary-market pricing to capture both cross-sectional and time-varying heterogeneity. We find a small but statistically significant greenium, averaging about 2 basis points for advanced economies and nearly 13 basis points for emerging markets. The greenium is larger for lower-rated issuers and increases when climate transition risks become more salient or when issuers are more vulnerable to climate change. Interaction effects indicate that global awareness of transition risks and domestic climate vulnerability jointly amplify the greenium. While green sovereign bonds trade at lower yields, the resulting fiscal savings are economically modest relative to total interest expenditures. A novel analysis of bond documentation shows that sovereign green bonds contain no binding commitments regarding environmental outcomes, suggesting that the observed greenium reflects symbolic rather than contractual sustainability value. |
| Keywords: | Green bonds; Sovereign debt; Greenium; Sustainable finance; Climate risk |
| JEL: | Q54 Q56 H63 G15 G12 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20817 |
| By: | Gryglewicz, Sebastian; Mayer, Simon; Morellec, Erwan |
| Abstract: | We study impact activism, where activist investors promote green transitions in firms. This activism faces two key challenges. First, an internal free-rider problem arises when insiders and activists free-ride on each other's efforts, weakening activism's effectiveness. Second, an external free-rider problem emerges when gains from activism are reflected in stock prices, discouraging activist investment or tilting it towards firms capable of transitioning independently. Our analysis highlights how factors such as investor preferences, carbon taxes, and firms’ ownership structure — public versus private — shape the effectiveness of activism, clarifying the conditions under which activism supports, rather than hinders, firms’ green transition. |
| Keywords: | Activism |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21225 |
| By: | Ambec, Stefan; Andersson, Henrik; Cezera, Stephane; Kanay, Aysegul; Ouvrard, Benjamin; Panzone, Luca; Simon, Sebastian |
| Abstract: | What can be done to reduce the carbon footprint of consumption? To answer this, we conducted an online shopping experiment that tested the effects of two policy tools: a carbon tax (at two levels) and a behavioral nudge in the form of a traffic light-style label indicating a product's carbon footprint (green for low, orange for medium, and red for high). To disentangle the tax's substitution effect from its income effect, we held consumers' purchasing power constant. We find that the tax alone significantly reduces the carbon footprint per euro spent but not per basket purchased, implying that the reduction is driven purely by the income effect. The label alone makes consumers buy fewer red products and more green products, although without reducing significantly their carbon footprint. We do find some substitution effect and a significant reduction of the carbon footprint per basket only when the tax is high enough and combined with the label. Next, we perform a welfare analysis grounded on a theoretical framework that accommodates for several assumptions about consumer's preferences and motivations. We estimate the loss of consumer's surplus from nudging consumers with the label. We also estimate the consumers' valuation of a ton of CO2 avoided when they care about their climate impact. |
| JEL: | D12 D90 H23 Q58 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20871 |
| By: | Mireille Chiroleu-Assouline; Xavier Koch |
| Abstract: | We study how a committed emission tax shapes the adoption of successively cleaner technologies that arrive over time under uncertainty. Environmental policy increasingly relies on carbon prices that are set in advance and held fixed while such technologies emerge, and we show that this very commitment can lock firms into an inferior technology. In a two-period model, technologies differ only in their fixed adoption cost and emission rate; a regulator commits to a uniform tax and firms choose whether and when to adopt. Under monopoly with perfect foresight, the regulator can induce adoption of the cleanest technology but is sometimes better off not doing so, when its environmental gain falls short of the adoption cost. Under imperfect information the commitment cuts both ways: under-estimating the likelihood of the cleanest technology sets the tax too low, so the firm waits and stalls on its initial technology, whereas over-estimating it sets the tax so high that adoption is blocked altogether. The misperception distorts only the first-period adoption margin, over a benefit–cost band whose width scales with the size of the error. Competition sharpens the trade-off. With symmetric firms a strictly higher tax is needed to trigger adoption, so competition unambiguously raises the cost of inducing a green transition - even though the welfare ranking of monopoly and duopoly remains ambiguous. When one firm enjoys an adoption-cost advantage, it eases adoption for its rival and relaxes the regulator’s problem, pointing to a role for targeted first-adopter support alongside the tax. |
| Keywords: | technology adoption, environmental regulation, commitment, path dependency, emission taxes, monopoly, Cournot duopoly, uncertainty |
| JEL: | D42 H23 O33 Q55 Q58 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12807 |
| By: | Yannick L'Horty; Ngoc-Thao Noet |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:tep:teppwp:wp26-08 |
| By: | Carattini, Stefano; Fletcher, Ian; Kendall, Chad; Price, Michael K.; Vu, Arthur |
| Abstract: | Many socially desirable policies are not implemented because of their ex-ante unpopularity, but this unpopularity may be overcome through experience with the policy. In this paper, we examine how opposition to carbon pricing in the state of Washington turned into support after voters experienced a cap-and-trade policy with revenues earmarked for environmental purposes – "cap-and-invest." Analyzing voting behavior at the census block group level, we observe that support varies by political affiliation as expected, but experience consistently increases support across the board. Using a proprietary survey, we further show that the increase in support among voters in Washington state is specific to the cap-and-invest policy they experienced; support for carbon pricing or climate policies more generally remained unchanged. |
| Keywords: | Carbon pricing; Experience; Public support; Voting; Polarization |
| JEL: | C93 D72 D83 H23 H71 Q58 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20948 |
| By: | Corin Blanc |
| Abstract: | In response to rising urban air pollution, European cities have adopted Low Emission Zones (LEZs), restricting the most polluting vehicles. While effective in improving air quality, these policies remain controversial due to concerns over fairness and acceptability. This paper examines the impact of London’s 2021 and 2023 Ultra Low Emission Zone (ULEZ) expansions on Subjective Well-Being (SWB). Using panel data from the UK Household Longitudinal Study and a staggered difference-in-differences design with individual and year fixed effects, we compare changes in life satisfaction among residents inside and outside the affected areas. We find that the 2021 expansion led to a decline in life satisfaction by approximately 0.4 points. We explore the mechanisms driving this decline and find that the well-being loss is mediated by car dependency and transport mode availability. While the policy increased reliance on public transport, we show that a better accessibility to public transport mitigates the decline in life satisfaction among London residents. Furthermore, we show that the well-being costs of the policy are regressive, disproportionately affecting lower-income households. These findings suggest that LEZs can generate short-term and unequal well-being costs despite achieving modest behavioural change, highlighting the need for complementary measures to enhance social acceptability. |
| Keywords: | Low Emission Zones (LEZs), Air pollution, Environmental policy, Subjective well-being, Life satisfaction, Staggered Difference-in-differences, Social acceptability |
| JEL: | I31 Q52 H23 R48 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2026-14 |
| By: | Delis, Manthos; Iosifidi, Maria; Michaelides, Panayotis G.; Ongena, Steven |
| Abstract: | We develop a dynamic model of bank credit allocation between green and brown projects under regulatory and monetary distortions. Banks optimally adjust portfolios as regulation reduces the expected returns and success probabilities of brown projects, while monetary policy shapes funding costs. These interacting channels persistently tilt lending incentives, reallocating credit toward greener activities and lowering emissions. The framework identifies which combinations of regulatory pressure and monetary support most effectively accelerate the green transition. Results remain robust with forward-looking banks, adjustment costs, and alternative policy rules. We further analyze how persistent regime shifts in regulation and monetary policy reshape the speed and composition of bank balance-sheet reallocation. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21128 |
| By: | Kiyoung Jeon (Department of International Trade, Chungnam National University, Daejeon, Korea); Zeynep Yom (Department of Economics, Villanova School of Business, Villanova University) |
| Abstract: | This paper studies whether global value chain (GVC) participation improves firm-level carbon productivity and why the effects differ by firm size. We develop a heterogeneous-firm model in which firms face fixed costs of adopting abatement capacity. Backward GVC participation can raise domestic carbon productivity by reducing domestic processing per unit of value added, while the effect of forward participation is theoretically ambiguous. We test these predictions using Korean manufacturing firms subject to the emission trading system during 2011--2021, combining firm-level emissions and financial data with industry-level GVC measures. To ensure empirical rigor, our design examines baseline dynamics via system GMM estimation, establishes primary causal identification through a shift-share instrument approach, and implements alternative specifications for exhaustive sensitivity checks. The results show that backward GVC participation is associated with higher carbon productivity mainly among large firms. Small and medium-sized enterprises show little response to GVC exposure or emission trading system (ETS) dummies, consistent with fixed costs limiting green adjustment. Further exploration of possible reasons behind this pattern suggests that large firms' gains are associated with both cost-driven sourcing from developing partners and technology-related links to advanced-economy partners, especially when financial constraints are weaker. |
| Keywords: | Carbon productivity; Carbon neutrality; SMEs; Firm-level data; Global value chains |
| JEL: | Q56 F18 F14 L25 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:vil:papers:67 |
| By: | Cocco, João F.; Mendes, Bernardo; Naaraayanan, Lakshmi |
| Abstract: | We study contractual features and lenders' motivations for offering Green mortgages, used to finance energy-efficient properties, in the United Kingdom. There is significant heterogeneity in benefits: preferential-rate mortgages offer 9bp discounts, while the benefits are substantially lower for products with upfront cashback. Our evidence shows that the green label functions as a tool for product differentiation and customer acquisition, with lenders tailoring product features around borrower heterogeneity. In particular, we show that they use upfront cashback as a salient pricing feature of credit contracts to target liquidity-constrained homebuyers. We find no evidence that the financial benefits reflect lower credit risk. |
| Keywords: | Real estate; Household finance; Banks; Energy efficiency; Climate finance |
| JEL: | R1 G5 Q4 Q5 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21346 |
| By: | Ladha, Rijhul; Das Banerjee, Anannya; Ramji, Aditya |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2026–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsdav:qt5744w1kp |
| By: | Halkos, George; Gkargkavouzi, Anastasia |
| Abstract: | The Theory of Planned Behavior (TPB) is the dominant psychological framework for explaining individual energy behavior, yet its predictive validity in this domain rests almost entirely on intentions or self-reported behavior, which correlate only modestly with objective measures. This exploratory scoping review, informed by the PRISMA extension for scoping reviews (PRISMA-ScR), maps how behaviour has been measured in quantitative TPB research on energy use, saving, and curtailment, and detects the specific studies that measured behavior objectively, through meters, sensors, billing or consumption records, monitored devices, or direct observation. Searches of Scopus and Web of Science identified 773 records, 467 unique records remained after deduplication and full-text assessment confirmed four eligible studies. Studies measuring energy behaviour through objective outcomes are therefore rare in the TPB literature, and where they exist, they rely either on consumption traces (records, meters, or sensors) or on coding by trained observers. A common design weakness is the inconsistency between constructs measured at the individual level and outcomes measured at the household, dormitory, or office level. Across the eligible studies, TPB constructs show weak and varying associations with objectively measured energy behavior; intention is often non-significant, while prediction improves when behavior is verified in real time against consumption traces. These findings are preliminary, as screening of the records whose abstracts did not state the measurement method is ongoing. Testing whether the theory explains energy behavior rather than self-reports, requires designs that pair person-attributable objective outcomes with full TPB measurement. |
| Keywords: | Theory of planned behaviour; energy behaviour; objective measurement; measurement practice; intention-behaviour Gap; Scoping Review. |
| JEL: | C80 C83 D90 D91 Q41 Q48 Q50 Q56 |
| Date: | 2026–07–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:130025 |
| By: | Gavriilidis, Konstantinos; Känzig, Diego; Raghavan, Ramya; Stock, James |
| Abstract: | We develop a novel measure of climate policy uncertainty based on newspaper coverage. Our index spikes during key U.S. climate policy events — including presidential announcements on international agreements, congressional debates, and regulatory disputes — and shows a recent upward trend. Using an instrument for plausibly exogenous uncertainty shifts, we find that higher climate policy uncertainty decreases output and emissions while raising commodity and consumer prices, acting as supply rather than demand shocks. Faced with this trade-off, monetary policy does not accommodate climate policy uncertainty shocks, shaping their transmission. Firm-level analyses show stronger declines in investment and R&D when firms have higher climate change exposure. |
| Keywords: | Climate policy |
| JEL: | D80 E66 H23 L50 Q58 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21146 |
| By: | Lafrogne-Joussier, Raphael; Martin, Julien; Mejean, Isabelle |
| Abstract: | We study state-dependent pass-through using the recent surge in energy cost as a natural experiment. The empirical analysis exploits data on firms' exposure to energy-driven cost shocks, matched with firm and product-level output prices from the French Producer Price Index (PPI). Pass-through of energy cost shocks increased from 70% before the energy crisis to full pass-through in 2021-2022. The pass-through of energy shocks is also found higher among the most exposed firms. A state-dependent model à la Cavallo et al. (2024) augmented with heterogeneous exposure to energy price shocks can replicate these patterns. The model is used to show how heterogeneity in firms' exposure to common shocks affects the aggregate response of the economy to a macro supply shock. |
| Keywords: | Inflation; Pass-through; Energy prices |
| JEL: | E31 E32 D22 Q43 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21156 |
| By: | Dhinakar Bala, Archana; Mattsson, Martin; Vyas, Sangita |
| Abstract: | What are the political consequences of setting ambitious policy targets, but then failing to meet them? We study this question in the context of India’s National Clean Air Programme (NCAP), a flagship policy designed to cut air pollution by 40% in 131 cities and address a crisis that causes 1.2 million deaths annually. Using multiple difference-in-differences approaches, we demonstrate that the program had no effect on air pollution. In a survey experiment with residents of NCAP cities, we show that informing citizens about NCAP boosted their approval of the government’s air pollution policy. Surprisingly, this effect persisted even when respondents were told the program had no impact — revealing a clear political benefit from the ambitious announcement, and minimal cost for the implementation failure. This incentive structure is consistent with the lack of political commitment to implementing NCAP, which we document, and is a likely explanation for the program’s failure. |
| JEL: | D78 K32 Q53 Q58 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20925 |
| By: | Marco Gallegati; William Ginn; Jamel Saadaoui; Solomos Solomou; Kun Tian |
| Abstract: | El Nino-Southern Oscillation (ENSO) anomalies have time-varying and asymmetric effects on U.S. WTI spot and futures prices over 1983-2024. A Time-Varying Parameter Local Projections (TVP-LP) framework recovers horizon-specific coefficient paths, allowing the transmission of a phase-specific ENSO anomaly to differ across historical oil-market environments. The evidence reveals that El Nino anomalies lower real oil prices at six- to twelve-month horizons, whereas La Nina anomalies raise them over the same horizon. Since the ENSO variables are phase-specific absolute Nino 3.4 SST anomalies measured in degrees Celsius, the estimated dynamic multipliers are interpreted per one-degree Celsius increase in the corresponding anomaly. For futures prices, responses to anomaly magnitudes of 0.6 C for El Nino and 0.5 C for La Nina yield declines of about 7.4-12.0 percent and increases of about 10.8-15.0 percent, respectively. Central-Pacific events, especially La Nina, generate stronger inflationary effects than Eastern-Pacific events, which are typically muted or deflationary. These findings indicate that ENSO-related oil-price risk depends jointly on phase, response horizon, calendar time, and spatial ENSO type. |
| Keywords: | oil price, ENSO, local projections |
| JEL: | Q41 Q54 C32 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-56 |
| By: | Marthe Mareels (-) |
| Abstract: | This paper provides evidence that supply-driven oil price increases depress GDP for more than a decade after oil prices have returned to their pre-shock level. These hysteresis effects are driven by two channels: a contraction in investment, and a steady decline in labour force participation. In contrast, oil price decreases do not produce sustained economic gains, indicating asymmetric effects. A comparison with aggregate demand shocks suggests that hysteresis arises through common underlying mechanisms. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:rug:rugwps:26/1147 |
| By: | Carattini, Stefano; Dvorak, Fabian; Logar, Ivana; Ozdemir-Oluk, Begum |
| Abstract: | Corporate social responsibility and the private provision of (global) public goods are of key interest to economists and policymakers. Over the last few years, many more private companies made their operations carbon neutral. It is an empirical question how consumers value carbon-neutral and low-carbon products, which we address as follows. First, we provide a meta-analysis of the literature. We analyze consumers’ demand for carbon-neutral and low-carbon products, based on an overall sample of 29, 666 participants. The focus is on average willingness to pay for carbon reductions as well as on the characteristics of the underlying literature, which is mainly based on stated preferences and controlled environments. Second, we leverage information on prices and product characteristics from one of the largest online marketplaces, Amazon’s. Using a hedonic approach, we infer from revealed preferences on consumers’ valuation of carbon- neutral products. The staggered process of carbon-neutral certification leads to a series of quasi-natural experiments, which we use for identification purposes. We find that the literature suggests a positive willingness to pay for carbon reductions that exceeds most estimates of the social cost of carbon. However, this finding is not supported by the hedonic analyses, where we do not find evidence that consumers value carbon neutrality. |
| Keywords: | Corporate social responsibility; Pro-social behavior; Stated and revealed preferences; Meta-analysis; Hedonic analysis; Carbon-neutral labels |
| JEL: | D12 D22 H41 Q51 Q54 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20843 |
| By: | Robinson, Anya; Steren, Aviv PhD; Tal, Gil PhD |
| Abstract: | California has set a target of achieving 100% zero-emission vehicle (ZEV) sales by 2035. While the state has made substantial progress, with ZEVs accounting for roughly 25% of new vehicle sales in 2025, adoption remains uneven across communities. Disadvantaged communities (DACs), which face disproportionate exposure to air pollution, continue to lag in ZEV uptake. Most DAC-related policy efforts to date have focused on demand-side interventions, such as consumer purchase incentives, rather than supply-side approaches that increase vehicle availability. Because more than half of ZEV sales in California occur through franchised dealerships, they are a critical gateway through which consumers access these vehicles and may represent an important leverage point for increasing adoption. |
| Keywords: | Engineering |
| Date: | 2026–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsdav:qt6pw1q9rf |
| By: | Rrukaj, Ritvana; Steen, Frode |
| Abstract: | Estimating non-linear autoregressive distributed lag models, we establish that short-run cost pass-through in the Swedish retail gasoline market depends on station heterogeneity. Our findings reveal a slower correction of the disequilibrium error in volume-adjusted prices compared to average pump prices. We also show that high volume stations possess longer price asymmetry. Our findings thus support that oil companies are more focused on pricing on days and at stations with higher sales, suggesting that earlier studies of pass-through using average prices underestimate the price asymmetry. Further, gasoline stations less exposed to local competition impose more prolonged price asymmetry. This is also true for full-service stations as compared to automated self-service stations. We show that the asymmetry, despite indicating only roughly three percent rise in consumer prices, accounts for nearly 40% of firms’ gross margins, carrying significant implications for market regulation and business strategies. |
| Keywords: | Gasoline markets; asymmetric short- and long-run cost pass-through; Station heterogeneity; Volume-adjusted prices; market power |
| JEL: | C12 C13 F14 L11 L71 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20876 |
| By: | Edenhofer, Ottmar; Franks, Max |
| Abstract: | We develop a unified cost-benefit framework that allows for a better understanding of nature conservation and climate policies under risk and uncertainty. We derive modified Hotelling rules from a social planner’s welfare optimization. They reveal four forces that jointly determine market design for climate and nature conservation: First, discounted marginal climate damages enter the social cost of carbon (SCC) and marginal ecosystem services the social value of nature (SVN). Second, climate and nature are coupled, which raises both prices: degradation of ecosystems increases the SCC, while climate damages raise the SVN. Third, a climate-nature beta quantifies additional hedging components of policies against fat tails, when we consider a stochastic setting with exogenous random shocks. The climate-nature beta summarizes the option values for abatement, adaptation, ecosystem restoration and carbon dioxide removal. Fourth, Markov markups quantify tipping risks, which we capture by extending the model to a constrained Markov decision process with state-contingent transition probabilities. Thereby, we endogenize tipping points: the likelihood of moving into a high-damage regime becomes a function of the atmospheric carbon stock and natural capital, which depend on policy choices. Thus, hazard risks are a policy-sensitive component of the system’s dynamics. The model yields state-contingent asset-pricing formulas for carbon prices, restoration subsidies, land charges, and capacity payments. We propose institutions at the level of the European Union that could implement Pigouvian taxes and subsides as well as new types of SCC- and SVN-indexed bonds to share non-diversifiable risks arising from Earth's changing climate and the degradation of its biosphere. |
| Keywords: | Biodiversity; Sustainability; Asset pricing; Welfare economics |
| JEL: | Q51 Q54 Q57 D81 G12 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21090 |
| By: | Gong, Haozhou; Lin, Chen; Sautner, Zacharias; Schmid, Thomas |
| Abstract: | Renewable energy (RE) is vital for addressing climate change, but the land use of hydro, solar, and wind plants can negatively affect biodiversity through habitat destruction. By combining spatial biodiversity data, satellite imagery, and asset-level information on 40, 911 RE plants, we develop a novel measure of RE’s biodiversity impact around the world. We find that solar plants cause the greatest negative impact overall, while hydro plants are located in the most biodiversity-sensitive areas. The biodiversity impact of RE has grown substantially over time, driven by increased land use and siting in more biodiversity-sensitive locations. This impact is highly concentrated, with the top 1% of plants and owners being responsible for the majority of impact. Three finance applications of our measure show that plants with private or financial owners and those that are project financed have lower biodiversity impacts. |
| Keywords: | Renewables; Biodiversity |
| JEL: | Q57 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20846 |
| By: | Palia, Ridhi; Ramji, Aditya; Das Banerjee, Anannya |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2026–07–14 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsdav:qt6b01b5dp |
| By: | Kathryn McDonald; Noémie Pinardon-Touati; Conor Walsh |
| Abstract: | We uncover a new mechanism that links growth and a decline in the energy intensity of production, observed globally since 1990. Using microdata from India and a causal research design, we demonstrate that the expenditure share of energy declines steeply with firm scale, due both to physical scaling laws and technology investment. Given that average firm size increases with growth, this scale dependence implies that production endogenously becomes less energy-intensive along the growth path. We develop a model of this mechanism in general equilibrium, and quantify significant reductions in aggregate energy intensity as low-income countries like India grow. We conclude with a discussion of the future path of emissions in India. |
| JEL: | D24 L25 O43 O44 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35405 |
| By: | Jenny Bjordal (Department of Geosciences, University of Oslo, Oslo, Norway); Evelien van Dijk (Department of Geosciences, University of Oslo, Oslo, Norway); Henri Cornec (Department of Economics, Yale University, New Haven, USA); Anthony A. Smith, Jr. (Department of Economics, Yale University, New Haven, USA; National Bureau of Economic Research, USA); Trude Storelvmo (Department of Geosciences, University of Oslo, Oslo, Norway) |
| Abstract: | Solar Radiation Modification (SRM) has been proposed as a potential tool to limit increases in global or regional temperatures caused by anthropogenic greenhouse gas emissions. While previous research has extensively examined the climate system's response to various SRM strategies, as well as their aggregate economic consequences, the regional distribution of economic impacts has received less attention. In this study, we use NorESM2ÐDIAMÑan Earth System Model coupled to a high-resolution integrated assessment modelÑto assess the economic impacts, measured in GDP per capita, in an idealised SRM scenario where incoming solar radiation is reduced by 1%. Our results suggest that, relative to a baseline without SRM, most countries experience economic gains under SRM, with only a few countries facing negative impacts. Low-income countries tend to see the largest benefits, reducing global economic inequality relative to the baseline. However, reduced damages and lower inequality are accompanied by higher emissions under SRM, potentially leading to additional adverse effects not captured here. These findings highlight potential trade-offs between economic benefits, reduced inequality, and increased emissions relevant for SRM governance. |
| Date: | 2026–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2524 |
| By: | Nicole Adler; Gianmarco Andreana; Gerben de Jong |
| Abstract: | Climate policy in global network industries is implemented across fragmented jurisdictions, yet firms respond through integrated operational networks. We develop a two-stage game-theoretic framework to analyze how firm-level responses interact with alternative governance structures. Regulators first choose emissions charges. Firms subsequently compete through pricing, service capacity and capital deployment decisions. The analytical results demonstrate that uniform global regulation maximizes welfare in symmetric markets. However, in sufficiently asymmetric markets, a uniform global charge is dominated by decentralized regimes. Multiple regulatory instruments better accommodate region-specific market externalities. We apply this framework to a calibrated case study of North American, Western European and transatlantic aviation markets. The numerical results establish that a globally coordinated regulator setting region-specific charges achieves the highest aggregate welfare. These aggregate gains nonetheless mask substantial distributional disparities across jurisdictions. Effective climate governance in network industries therefore requires more than determining an efficient emissions charge. Policy instruments ought to accommodate regional heterogeneity and transfer mechanisms will be necessary to ensure efficient, politically stable cooperation. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.17290 |
| By: | Genakos, Christos; Kampouris, Themistoklis |
| Abstract: | This paper examines the “right†geographic definition of relevant markets by analyzing how excise tax pass-through varies with local competition in the retail gasoline market of a large metropolitan city. Using a natural experiment from three unanticipated and exogenous fuel tax hikes and detailed station-level price data, we show that average pass-through is invariant to the number of nearby competitors across various geographic definitions. This contrasts with theoretical predictions and prior island-based evidence, suggesting that the entire metropolitan area functions as a single market. Our findings challenge standard isodistance- or isochrone-based market delineations used in academic research and competition policy. |
| JEL: | H22 L1 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21091 |
| By: | Hwang, Roland; Dhole, Anuj; Fulton, Lewis; Murphy, Colin |
| Abstract: | The California medium- and heavy-duty zero emission vehicle (ZEV) market is poised for growth despite challenges to regulatory authority at the federal level. To ensure market momentum, long-term funding certainty is needed for the medium- and heavy-duty ZEV incentive program, called HVIP. In 2024, the CARB board voted to redirect the Clean Fuel Reward (CFR) program from light-duty ZEVs to medium- and heavy-duty zero-emission truck (ZET) incentives. While this provides a foundation for revenue for ZET incentives, ITS-Davis analysis finds that it will likely fall far short of long-term HVIP revenue needs. We estimate the total HVIP funding gap (including both ZETs and ZEBs) after CFR revenues are considered for the 9-year period from 2027-2035 to be between $4.2 billion and $26 billion, with a mid-case scenario funding gap of $8.5 billion. The wide range is due to uncertainties in ZEV market growth rates and CFR revenues. The funding gap necessitates new approaches to address, such as lowering the incentive levels per vehicle, implementing new funding sources, and adopting innovative financing mechanisms. For example, we estimate that reducing the average incentive by 50% starting in 2031 and assessing a $1, 400 registration fee on Class 4-8 diesel trucks starting in 2027 could support the achievement of annul ACT target volumes in the post-2030 timeframe. |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2026–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsdav:qt16x180rr |
| By: | Leogrande, Angelo; Anobile, Fabio; Costantiello, Alberto; Drago, Carlo; Arnone, Massimo |
| Abstract: | This study aims to examine the interrelated effects of finance structure, institutional quality, and macro-demographics on CO₂ emissions per capita in OECD countries from 2004 to 2021. Building on the conventional linear and aggregate nature of the finance–environment relationship, this study suggests an improved methodology based on a hybrid framework combining panel estimation, machine learning-based clustering, and nonlinear modeling. The empirical findings support a positive relationship between bank-based intermediation structure, represented by private credit and credit quality, and CO₂ emissions per capita, which could be explained by a scale effect. At the same time, a negative relationship is found between non-performing loans and CO₂ emissions per capita. In addition, a negative relationship is found between the assets of pension funds and mutual funds and CO₂ emissions per capita. This suggests a critical role played by long-horizon investors in offsetting the carbon footprint of economic activity. Government effectiveness is found to have a positive relationship with CO₂ emissions per capita. This could reflect development stage considerations rather than institutional failure. Finally, a weak positive relationship is found between population density and CO₂ emissions per capita. This supports scale efficiencies. The K-means clustering methodology reveals a strong structural heterogeneity in the finance–environment relationship. This supports the view that there are unique structural regimes in which similar CO₂ emissions per capita outcomes are influenced by a variety of interrelated finance structure and institutional quality drivers. In addition, the Random Forest methodology outperforms other machine learning techniques. This suggests a strong nonlinear nature in the finance–environment relationship. Finally, the empirical findings support a relatively stronger emphasis placed on structural finance structure and institutional quality variables rather than short-run macroeconomic variables in explaining variations in CO₂ emissions per capita. |
| Keywords: | Financial structure; CO₂ emissions; Institutional quality; Sustainable finance; Machine learning |
| JEL: | C23 C45 G20 Q54 Q56 |
| Date: | 2026–02–25 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128168 |
| By: | Lutz Kilian; Michael D. Plante; Alexander W. Richter |
| Abstract: | The 2026 Iran war has raised the question of how exposed the U.S. economy is to geopolitical oil supply disruptions. It is widely believed that the U.S. economy has become less vulnerable to such disruptions as it has reduced its dependence on oil and changed from a major net oil importer to a net oil exporter. We develop a two-country model of the global economy with large geopolitical oil supply disruptions that distinguishes between the U.S. economy and the rest of the world. We find that the response of U.S. real GDP growth to the disruption in global oil supplies today is only one-twentieth of what it would have been in 1980. Moreover, the response of U.S. real GDP growth today is only one-sixth of the decline in the rest of the world. |
| Keywords: | oil price; geopolitics; oil supply disruptions; open economy; structural change |
| JEL: | E13 E32 F41 F43 Q43 |
| Date: | 2026–06–23 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:103437 |
| By: | Lumbanraja, Alvin; Mouabbi, Sarah; Passari, Evgenia; Rousset Planat, Adrien |
| Abstract: | Commodity supply shocks are a plausible but empirically elusive source of business-cycle fluctuations. We develop a comprehensive framework to measure them, constructing daily supply and demand proxies for 20 commodities — spanning energy, metals, agriculture, and livestock — from textual analysis of over one million news articles (2001-2023). These measures allow us to separate supply from demand across the full commodity market, not just oil. A striking finding emerges: non-oil supply disruptions affect inflation and industrial production at least as strongly as oil disturbances, a result previously undocumented in the literature. Transmission varies sharply with countries' commodity trade positions: net importers experience more persistent output contractions and stronger inflation pass-through, while net exporters are partially insulated. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21244 |
| By: | Frattini, Tommaso; d'Adda, Giovanna; Ferro, Simone; Romarri, Alessio |
| Abstract: | Using large-scale high-granularity data from a food delivery platform and granular pollution and weather information, we study how PM 2.5 fluctuations affect riders' absenteeism, productivity, and accidents. Exploiting exogenous pollution variation from inverse boundary layer height, we find that higher pollution increases absenteeism for all workers and raises delivery times and accident rates only among (e-)bike riders, who must exert physical effort while working. Affected workers compensate productivity losses by working longer hours. Monetary incentives mitigate the effects on absenteeism but do not offset the decline in productivity and appear to exacerbate accident risk. |
| Keywords: | Absenteeism |
| JEL: | H4 J28 Q52 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20884 |
| By: | Alice Lixuan Xu; Clemens Stiewe |
| Abstract: | This paper estimates the effect of cross-border transmission constraints on suspected market power abuse in the German wholesale electricity market. Using a 2SRI instrumental variables approach, we study suspected strategic behavior by German gas- and coal-fired power plants in 2022-2024. Cross-border transmission constraints are measured using the maximum and minimum bounds of zonal net position, while suspected market power abuse is measured as the upward or downward deviation of observed dispatch from a modeled competitive benchmark. We find that transmission constraints significantly elevate the likelihood of suspected market power abuse. When headroom for further imports is already scarce, reducing import headroom by one Gigawatt (GW) increases the odds of suspected capacity withholding by 15%. Similarly, reducing export headroom by one GW when it is scarce increases the odds of suspected capacity push-in, a strategy to depress prices, by 16%. These results provide empirical support for interconnection expansion as an instrument to mitigate market power. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.00977 |
| By: | boughabi, houssam |
| Abstract: | This paper develops a volatility-based framework for crude oil pricing by examining the interaction between financial market volatility and commodity-specific risk. The spot price of oil is modeled as a linear combination of stock market and commodity volatilities, allowing the derivation of equilibrium conditions linking financial and commodity markets. Particular attention is given to the dynamics of the functions (A(t, T)) and (B(t, T)), whose evolution reveals a common trajectory consistent with equilibrium behavior between oil price volatility and underlying commodity risk. The analysis highlights the role of volatility transmission mechanisms in shaping commodity prices and provides a novel perspective on the connection between financial market fluctuations and real economic fundamentals. The findings contribute to the literature on commodity pricing by offering a volatility-driven approach that integrates market expectations and risk dynamics into the valuation of crude oil. |
| Keywords: | Volatility Models, Financial Equilibrium, Long Memory, Commodity Risk |
| JEL: | C22 G13 Q41 |
| Date: | 2025–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129471 |
| By: | Lutz Kilian; Michael D. Plante; Alexander W. Richter |
| Abstract: | Recent Federal Reserve Bank of Dallas research shows that the response of U.S. real (inflation-adjusted) GDP growth to the 2026 Iran war is only one-twentieth of what it would have been in 1980. Moreover, the response of U.S. real GDP growth today is only one-sixth of the decline in the rest of the world. |
| Keywords: | oil price; geopolitics; oil supply disruptions; structural change |
| Date: | 2026–06–23 |
| URL: | https://d.repec.org/n?u=RePEc:fip:d00001:103434 |
| By: | Andrés Ham (Universidad de los Andes); Emmanuel Vazquez (CEDLAS-IIE-FCE-UNLP); Monica Yanez-Pagans (The World Bank); Camilla Knudsen (The World Bank); Saher Asad (The World Bank) |
| Abstract: | This paper estimates the share of green employment in seven South Asian countries using an O*NET-based definition and finds that, on average, 24 percent of jobs in the region are currently green. The paper then assesses the potential for non-green workers to transition into green occupations. Among all non-green workers, 57 percent could transition to green jobs with limited reskilling, 16 percent with moderate upskilling, and 27 percent with full skills reconversion. These results suggest three policy priorities—promoting on-the-job training, strengthening firm-based and public–private training systems, and adopting a dual strategy that invests in reskilling and upskilling today’s workforce while simultaneously advancing forward- looking education reforms that equip future cohorts for new and emerging green occupations. |
| JEL: | J21 J24 J62 O57 Q01 Q58 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:dls:wpaper:0377 |
| By: | Vanden Eynde, Oliver; Vargas, Juan |
| Abstract: | This paper examines how climate change and natural resource dynamics contribute to conflict, with a focus on the implications of the green transition. It reviews empirical evidence showing that extreme weather events - such as droughts, floods, and heatwaves - are linked to increased violence, particularly through economic disruptions, reduced agricultural productivity, and displacement. The analysis also explores the mechanisms through which climate shocks influence conflict, including opportunity costs, resource competition, and behavioral responses to environmental stress. The discussion then turns to the role of natural resource exploitation, especially in the context of rising demand for minerals essential to low-carbon technologies. The paper highlights how resource price and availability shocks can trigger conflict, often depending on the type of resource, extraction method, and local governance. It also addresses the overlap between climate- and resource-driven conflict risks, emphasizing that their interaction may amplify instability. Throughout, the paper identifies open research questions related to prediction, the effects of long-run environmental changes, and the design of policy responses. These include insurance schemes, climate adaptation strategies, infrastructure investment, and regulatory frameworks for resource governance. The findings point to the need for research that integrates climate and conflict dynamics, with the goal of informing policies that can mitigate the risks associated with environmental change and resource pressures. |
| Keywords: | Conflict; Climate shocks; Climate change; Natural resources |
| JEL: | D72 D74 L23 Q54 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21170 |
| By: | Raisa Sherif; A. R. Shariq Mohammed; Matthew H. Goldberg |
| Abstract: | We study how misperceptions of local air quality shape individual behavior and policy preferences in urban India. Using a pre-registered, online survey experiment with 2, 117 respondents across three major cities, Mumbai, Bengaluru, and Kolkata, we elicit subjective beliefs about local air quality and randomly provide a subset of participants with accurate Air Quality Index (AQI) data for their city. Participants then allocate real money between themselves and a tree-planting initiative and report support for various environmental policies. We document widespread, systematically biased misperceptions, with individuals in highly polluted cities often underestimating pollution risks. These misperceptions are correlated with lower environmental concern, lower policy support, and weaker climate beliefs. However, providing corrective information does not significantly shift either pro-environmental contributions or stated policy preferences. The only exception occurs among women, who exhibit increased support for environmental policies following treatment. Our findings highlight the limits of informational interventions in contexts of chronic pollution and suggest that misperceptions may reflect deeper patterns of disengagement from environmental issues. |
| Keywords: | Air pollution perceptions, Policy preferences, Public good contributions, Urban environment, Information interventions, India |
| JEL: | Q53 Q58 C93 D83 |
| Date: | 2026–02–10 |
| URL: | https://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2026-02 |
| By: | E. Marrocu; R. Paci; L. Serafini |
| Abstract: | This paper investigates the determinants of interfirm agreement formation in the context of the twin digital and green transition. We focus on strategic alliances and joint ventures involving at least one Italian firm, using SDC Platinum data on agreements announced between 2000 and 2025. Digital and green agreements are identified through a keyword-based classification of deal synopses. The empirical analysis is conducted at the dyadic level by comparing realised agreements with potential firm pairs within the framework of rare event logit models, focusing on the role of geographical, technological and relational proximity. The results show that technological proximity is the strongest predictor of agreement formation. Firms operating in connected industrial domains are substantially more likely to collaborate, suggesting that compatible knowledge bases and absorptive capacity are central to partner selection. Geographical proximity also matters, mainly through coordination and interaction costs rather than administrative co-location. The comparison between digital and green agreements shows that both domains require technological compatibility, but they rely on different forms of proximity and complementarity. Digital agreements are especially sensitive to broad network-based technological proximity, consistent with the modular and cross-sectoral nature of digital technologies. Green agreements combine compatible but differentiated capabilities with a stronger spatial and implementation-related component, reflecting their connection to infrastructures, regulation, and local coordination conditions. Prior relational proximity increases the probability of agreement formation in the full sample, while network effects are more exploratory in the digital and green subsamples. The paper contributes to the literature on alliances, proximity, and transition-oriented innovation by showing that twin-transition collaboration is shaped by multiple and partially distinct proximity mechanisms. |
| Keywords: | twin transition, strategic alliances, joint ventures, proximities, networks, rare events |
| JEL: | C25 L14 O31 O33 R12 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:cns:cnscwp:202610 |
| By: | Amengual, Dante; Fiorentini, Gabriele; Sentana, Enrique |
| Abstract: | We propose specification tests for Gaussian SVAR models identified with short- and long-run restrictions that assess the theoretical justification of the chosen identification scheme by checking the independence of the structural shocks. We consider both moment tests that focus on their coskewness and cokurtosis and contingency table tests with discrete and continuous grids. Our simulations confirm the finite sample reliability of resampling versions of our proposals, and their power against interesting alternatives. We also apply them to two influential studies: Kilian (2009) with short-run restrictions in oil markets and Blanchard and Quah (1989) with long-run ones for the aggregate economy. |
| Keywords: | Coskewness; Cokurtosis; Moment tests; Oil market; Pseudo maximum likelihood estimators |
| JEL: | C32 C52 E32 Q41 Q43 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20975 |
| By: | Unterguggenberger Mara; Dreoni Ilda (European Commission - JRC); Klenert David (European Commission - JRC) |
| Abstract: | Carbon pricing policies are often met with resistance from parts of the public, even if they are designed with efficiency and fairness in mind. To understand in more depth what the policy design characteristics of carbon price policies are that increase public acceptability, we perform a systematic literature review. We use a dual-stage screening process to systematically review both peer-reviewed and grey literature. Out of the 431 initial search results we selected 23 papers, comprising 38 survey samples with approximately 60, 000 participants from 17 countries. 58% of them examine revenue redistribution strategies and 30% assess the impact of carbon price levels, which cover a wide range of prices. We find that revenue redistribution mechanisms in general exhibit the largest proportion of increased acceptability. In particular, monetary redistribution schemes, such as cash transfers or tax cuts, as well as green public investment, are identified as having a positive effect on the acceptability of carbon pricing policies. Further, we highlight factors that are relevant for public support but are currently under-explored, such as policy transparency, timing of redistribution and administrative scale of implementation. Also, geographical coverage remains uneven, with 73% of samples drawn from North America and Europe, and Germany alone accounting for 31%, underscoring the need for broader regional representation in future research. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:taxref:202609 |
| By: | Christian Doh Dinga; Mukunda Badarinath; Seyed Hossein Jamali; Laurens de Vries; Milos Cvetkovic |
| Abstract: | Electricity procurement constitutes a significant share of operational costs for large electricity consumers, and thus exposure to extreme prices poses a substantial financial risk. This paper proposes a method to generate EUPHEMIA-compatible bids for flexible demand to enable their participation in the European day-ahead electricity market while minimizing risks. Two strategies are considered, resulting in two bid formats: hourly bids (HBs), representing flexibility via marginal price responsiveness through price-quantity pairs, and exclusive-group bids (EBs), representing flexibility via mutually exclusive operational schedules submitted at opportunity cost. Our method is evaluated on a hypothetical electrolyzer system and a real-world steel plant under different market conditions. Results show that the economic performance of each strategy depends on the operational characteristics of the load and market conditions. Under volatile market conditions, highly flexible systems achieve better economic outcomes with EBs, while less flexible systems with stronger intertemporal constraints perform better with HBs. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.24183 |
| By: | Kevin Kuruc |
| Abstract: | The discussion of impending population decline is often dismissed or minimized by arguments that downplay its urgency – or even welcome this development – because of the proposed environmental benefits. This paper argues that the environmental benefits of depopulation are far smaller than widely believed, and that complacency about population decline may be counterproductive to climate goals. First, there is a fundamental issue of timing mismatch. Demographic change unfolds over generations, while effective responses to emissions and environmental harm require immediate action. Second, effective climate strategies, such as carbon capture, require high fixed capital and labor costs. The smaller the economy, the larger the share of national income required to achieve climate goals. Beyond the climate, there is little evidence to suggest that increases in per-capita resource availability from depopulation would materially improve living standards, as modern natural-resource constraints on well-being are limited and declining. In contrast, sustainability depends on policy, human ingenuity, and fiscal capacity, none of which are aided by a shrinking and aging population. Taken together, this paper argues that effective sustainability policy will require sustained public investment and proactive policy. |
| Keywords: | environmental economics, demographics |
| Date: | 2026–02–01 |
| URL: | https://d.repec.org/n?u=RePEc:cxx:wpaper:the-environmental-benefits-of-low-fertility-are-overstated-2 |
| By: | Forslid, Rikard |
| Abstract: | Cross-border electricity trade generates classical arbitrage gains but may reduce welfare in small electricity-abundant economies. I develop a two-country general equilibrium model in which electricity is an upstream rent-generating input and manufacturing operates under monopolistic competition and increasing returns to scale. When trade equalizes electricity prices, the smaller economy gains from exports but loses its cost advantage in manufacturing, inducing firms to relocate toward the larger market. The net welfare effect depends on the balance between arbitrage gains and agglomeration losses. Quantitative simulations show that industrial relocation effects dominate across a wide range of parameter values, so that electricity exports are not welfare-improving for the smaller economy. |
| Keywords: | Industrial location; Welfare |
| JEL: | F12 F15 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21329 |
| By: | Gechter, Michael; Kala, Namrata |
| Abstract: | Firm location decisions have externalities on other firms due to competitive or agglomerative forces, and on the environment. We study an environmental place-based policy that randomly moved 20, 000 firms in New Delhi. Relocation reduces pollution, but firm exit increases. We combine the exogenous assignment of firms to industrial plots with a model to estimate spillovers on neighboring firms, showing that firm survival rates could have been increased by allocating firms to plots accounting for input-output linkages. These results provide causal evidence on how firm presence impacts environmental quality, and how spillovers can be used to minimize costs on regulated firms. |
| JEL: | Q52 Q53 Q56 R11 R38 D22 L25 L51 O12 O13 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21060 |
| By: | Isla Globus-Harris; Daniel H Karney |
| Abstract: | We construct an analytical general equilibrium model of an economy with carbon offsets, and show that increasing the carbon offset price has an ambiguous effect on aggregate emissions and welfare. Using two carbon accounting metrics, we demonstrate that offsets are over-credited under many parameterizations; however, offset under-crediting can also occur. Due to general equilibrium effects, neither carbon accounting metric is a sufficient statistic for welfare. Furthermore, we define four margins whereby offsets can respond to payments, including a margin not previously identified. Our results suggest that market spillover effects warrant consideration when evaluating carbon offset policies. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.25909 |
| By: | Becker, Ann-Kristin; Hornung, Erik |
| Abstract: | Industrialization boosts aggregate incomes, but its distributional effects remain debated. We study the impact of coal-driven industrialization on unskilled labor incomes using novel panel data on wages from 667 Prussian localities (1800-1879), extended with county-level data through 1914. Exploiting spatial variation in coal proximity in difference-in-differences and event-study designs, we find that wage gains in coal-rich regions emerged once industrialization accelerated in the 1850s and continued to grow until WWI. Evidence from 3, 000 household accounts shows that coal proximity raised labor incomes primarily for low-skilled workers, with weaker effects for high-skilled and mechanical occupations. This pattern suggests that industrialization reduced wage inequality by compressing the local skill premium. Mediation analysis indicates that wage gains for unskilled workers were primarily driven by technology adoption and the increasing demand for low-skilled labor, rather than by sectoral change or the spread of the factory system. |
| Keywords: | Industrialization; Labor income; Structural change; Energy transition; Technological change; Agglomeration economies; Deskilling |
| JEL: | C23 J31 N33 N73 N93 O13 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20810 |
| By: | Gerarden, Todd; Bollinger, Bryan; Gillingham, Kenneth; Xu, Daniel Yi |
| Abstract: | This study examines the effects of tariffs imposed by the U.S. on imported solar panels. We first provide clear evidence that tariff-exposed rms shifted production to locations that did not face tariffs, and that domestic prices increased relative to other markets. We then develop a structural model to analyze welfare effects. We find that the tariffs generated modest gains for domestic manufacturers and for government revenues, but larger losses in domestic consumer surplus and environmental benefits, thereby reducing domestic welfare. Furthermore, the tariffs reduced domestic solar industry employment and wages. By contrast, subsidizing solar panel manufacturing could increase domestic production, employment, and welfare. |
| Keywords: | Tariffs |
| JEL: | F14 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20848 |
| By: | Torijano, Eugenio |
| Abstract: | En este documento se presenta información de la industria eléctrica de los ocho países que conforman el Sistema de la Integración Centroamericana (SICA). Se consideran dos grupos de países: i) los seis países que integran el Mercado Eléctrico Regional de América Central y se incluyen como Sistema de Interconexión Eléctrica de los Países de América Central (SIEPAC) (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua y Panamá), y ii) bajo la sigla SICA se incluyen los ocho países que conforman el organismo de integración referido (los seis ya mencionados, SIEPAC, más Belice y la República Dominicana). El documento presenta cuadros regionales y nacionales con datos estadísticos de la industria eléctrica, la mayor parte actualizados a 2024, salvo algunos datos que al cierre de esta publicación aún no se encontraban publicados con las cifras correspondientes a 2024. En los cuadros se muestran los resultados de los segmentos de producción y distribución de electricidad en los dos mercados relevantes (mercados mayoristas y mercados regulados), las transacciones regionales (para los países del SIEPAC) y las binacionales (transacciones de electricidad entre México y Belice y Guatemala). En la sección de hechos relevantes se comentan las principales tendencias en el comportamiento de la oferta y el consumo de electricidad, y se describen las principales adiciones de nuevas plantas generadoras que iniciaron operación. Esta publicación ha sido posible gracias a la colaboración de las instituciones nacionales y regionales del sector eléctrico. La Unidad de Desarrollo Sostenible y Recursos Naturales de la sede subregional de la Comisión Económica para América Latina y el Caribe (CEPAL) en México pone a disposición este documento, esperando que contribuya a un mejor entendimiento de la evolución de la industria eléctrica en los países de la región del SICA. |
| Date: | 2026–05–05 |
| URL: | https://d.repec.org/n?u=RePEc:ecr:col094:89994 |
| By: | Martin, Simon; Verboven, Frank |
| Abstract: | Price caps are commonly used to protect consumers from excessive price increases, yet their consequences remain understudied. This paper analyzes the Belgian retail gasoline market, using daily price data from 2016–2019 for around 3, 000 gasoline stations. We examine whether price caps are effective at constraining prices, or instead serve as focal points that encourage coordinated price-setting behavior. We first document several key facts: pervasive price rigidity and the wide presence of prices at the caps or at integer discounts below the caps. We subsequently develop a framework to show that the price caps constrain only a limited fraction of stations, and induce a large fraction to coordinate on higher prices at or below the caps. Removing price caps would substantially reduce prices and profit margins by an amount comparable in magnitude to that associated with the collapse of an explicit cartel. |
| JEL: | D22 D83 L13 L41 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21297 |
| By: | Zamora, Christian Marvin B. |
| Abstract: | The 2026 US-Israel-Iran conflict and the resulting Strait of Hormuz disruption sent Dubai crude above $130 per barrel, acutely exposing the Philippines as an economy sourcing around 90% of crude from the Middle East. Using the 2023 IFPRI Nexus Social Accounting Matrix (SAM), this paper provides an economy-wide welfare assessment combining SAM multiplier analysis with Structural Path Analysis (SPA) across seven policy scenarios, including the enacted TRAIN excise suspension (RA 12316) and the UPLIFT emergency transfer framework (EO 110). At current shock levels, Philippine GDP contracts by 2.23% under full pass-through; the 50% baseline scenario, a conservative lower bound, yields a 1.12% contraction. Welfare losses are regressive, with the poorest rural households losing 2.4 times more income than the richest urban households, a ratio that persists regardless of the scale of excise relief due to its rank-neutrality. Pure targeted transfers without excise suspension deliver full protection to bottom-40% households at PHP 25.9 billion (0.09% of GDP), one-eleventh the cost of full tax suspension, providing a model-derived spending floor for the UPLIFT social amelioration programme. Pass-through management is the most powerful short-run instrument, cutting losses by three-quarters at 25% pass-through and exceeding the relief from full excise suspension. |
| Keywords: | excise tax; household welfare; oil price shock; pass-through; Philippines; SAM multiplier; structural path analysis |
| JEL: | D57 E62 H22 O53 Q43 |
| Date: | 2026–03–30 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128542 |
| By: | Masood Tadi; Milan Fičura; Jiří Witzany |
| Abstract: | We study natural gas storage valuation under a stochastic futures term structure using deep reinforcement learning (DRL). The storage problem is formulated as a continuous-state, continuous-action Markov Decision Process and solved using the Deep Deterministic Policy Gradient (DDPG) algorithm with Prioritized Experience Replay (PER) buffer and a constraint-aware policy network. We benchmark the approach against intrinsic and rolling intrinsic strategies and find that DRL consistently outperforms intrinsic valuation and achieves competitive performance relative to rolling intrinsic in markets with jumps and seasonality. The results show that DRL provides a practical valuation framework that captures additional extrinsic value under realistic market dynamics and operational constraints. |
| Keywords: | Natural Gas Storage, Rolling Intrinsic Valuation, Deep Reinforcement Learning |
| Date: | 2026–06–12 |
| URL: | https://d.repec.org/n?u=RePEc:prg:jnlwps:v:6:y:2026:id:6.003 |
| By: | Jack, Kelsey; Ryan, Nicholas |
| Abstract: | Economic development relies on and transforms the environment. The transformation is evident in the poor environmental quality in many developing countries. For example, air quality in Southeast Asia is three times worse than in the United States, in sub-Saharan Africa four times worse and in South Asia more than six times worse. We model how environmental quality affects health, productivity and well-being and how individuals privately adapt to environmental hazards. We also model how collective action and formal regulation contribute to environmental quality. We draw three main findings from a review of empirical research on these mechanisms. First, individual adaptation to environmental hazards is both inadequate as a remedy and inefficiently low. Second, collective action, without the state, to manage resources or address externalities has been outstripped by the scale of environmental problems. Third, state action through formal regulation works better than it looks. Many formal regulations are coarse, poorly targeted and inefficient, but nonetheless yield benefits in excess of their costs. |
| Keywords: | Economic development; Pollution; Climate change |
| JEL: | O10 Q0 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21087 |
| By: | Head, Keith; Mayer, Thierry; Melitz, Marc J; Yang, Chenying |
| Abstract: | We model a multi-stage supply chain for EVs from battery production to vehicle distribution. Given industrial policies, firms select where to open facilities at each stage. This is a difficult combinatorial choice problem that we solve with a fast mixed integer linear programming formulation. We estimate the variable and fixed costs parameters using SMM. Counterfactual simulations reveal a tension between boosting EV adoption and promoting domestic supply chains. Due to increasing returns, even unconditional subsidies raise the number of factories in the subsidizing region - by about 16% for EVs and 7% for cells in North America, and even more in Europe. Theoretically, local assembly requirements can push down delivered marginal costs relative to unconditional subsidies. Empirically, local content requirements quadruple the expansion of cell factories in America, but they drive up costs and reduce subsidy uptake, undoing more than half of the EV adoption stimulus coming from pure buyer subsidies. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21184 |
| By: | Dongsoo Kim (Korea Institute for Industrial Economics and Trade) |
| Abstract: | This report examines the rapidly evolving global landscape of critical mineral resources, highlighting the intensifying strategic weaponization of these materials by major powers. As China consolidates its monopolistic position in the refining, smelting, and processing of critical minerals, it increasingly leverages export controls as diplomatic and trade negotiation tools. In response, the United States is shifting its strategy under the second Trump administration, pivoting from providing subsidies for foreign investments toward securing independent domestic supply chains. The US approach heavily emphasizes bilateral cooperation with resource-rich nations and domestic project development. Concurrently, the European Union (EU) has enacted the Critical Raw Materials Act to systematically reduce its reliance on China. The EU aims to bolster regional autonomy by initiating 60 strategic projects spanning extraction, processing, and recycling. Within this geopolitical context, South Korea has laid a legal foundation through its three supply chain laws, yet faces inherent geographical limitations. This paper argues that South Korea must implement highly tailored, mineral-specific industrial policies, actively support corporate efforts to secure independent supply networks, and foster international partnerships to mitigate supply chain risks effectively. |
| Keywords: | critical mineral resources; CMR; rare earths; rare earths elements; REEs; China; Chinese industry; minerals processing; minerals and mining; supply chains; global value chains; South Korea |
| JEL: | F13 F14 F52 |
| Date: | 2026–01–28 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kietia:023108 |
| By: | Jondeau, Eric; Vallée, Lou-Salomé |
| Abstract: | This paper develops a macroeconomic framework to measure the environmental footprint of a national financial system. By combining the national financial accounts with an environmentally extended multi-regional input-output (EE-MRIO) model, we estimate the greenhouse gas (GHG) emissions and other environmental pressures indirectly financed by domestic financial institutions. The framework allows us to reconstruct "from-where-to-where" exposures across institutional sectors and asset classes, while accounting for the full chain of financial intermediation and avoiding double counting. Applying this methodology to the Swiss financial system, we find that financed emissions amount to 120 million tons of CO2e in 2022, around 2.9 times Switzerland’s territorial emissions. Although emissions per unit of assets have declined, the overall footprint remains large due to asset growth and substantial foreign exposures. Extending the analysis beyond GHGs, we show that financed pressures on land use, water use, and material resource extraction are of similar magnitude to Switzerland’s consumption-based environmental footprint. |
| Keywords: | Environmental footprint; financed emissions; financial accounts; Input-output structure |
| JEL: | G20 Q54 Q56 E44 C67 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20937 |
| By: | Jason Nassios |
| Abstract: | Australia is one of the world's largest exporters of liquefied natural gas (LNG), which is natural gas cooled into liquid form for transport and export. Yet Petroleum Resource Rent Tax (PRRT) collections remain modest relative to LNG production and export revenues. This paper argues that low PRRT revenues are primarily structural, reflecting incompatibilities between the design of the tax and the economics of modern LNG projects. Two mechanisms are central. First, tax base measurement: gas transfer prices used to value upstream sales are not publicly observed, introducing uncertainty about how LNG-related rents are reflected in the tax base. Second, intertemporal deferral: large upfront capital expenditures generate carried-forward deductions that are uplifted over time, delaying the recognition of taxable rents. As a result, PRRT liabilies are confined to a narrow upstream base and deferred over the life of projects. Despite strong underlying profitability, observed PRRT revenues remain limited. Given this, incremental reforms such as increasing the statutory tax rate, are unlikely to materially improve rent capture, because the underlying tax base is constrained. More substantive gains are likely to arise from reforms that broaden or more accurately define the tax base. Capturing a larger share of LNG-related rents will require fiscal instruments that more directly target observable project values, or better align taxation with the full LNG value chain. |
| Keywords: | Petroleum Resource Rent Tax, Resource rent taxation, Uplift, Deductions |
| JEL: | H21 H25 Q38 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:cop:wpaper:g-372 |
| By: | Matthijs Leegstra (Erasmus University Rotterdam); Erik Kole (Erasmus University Rotterdam); Rasmus Lönn (Erasmus University Rotterdam) |
| Abstract: | This study examines how climate-related physical and transition risks affect credit risk. We develop a modular framework based on a threshold model for credit migrations, linking the latent credit cycle to key economic indicators to measure credit risk in corporate bond markets. Using historical rating migrations, we estimate the model parameters and apply the framework to U.S. data to assess the implications of alternative transition scenarios. These scenarios generate projected paths for credit cycles that differ markedly in direction, magnitude, and volatility. These differences translate into substantial variation in both expected losses and tail risks for diversified bond portfolios. Notably, high-quality bond cohorts are also sensitive to policy choices. Comparisons with a continuation of current policies show that orderly transitions, characterized by reduced physical damages and increased transition costs, entail higher initial expenses but deliver net savings from 2035 onward. In contrast, disorderly transitions result in steep cost increases after 2030 and overall higher costs by 2050. |
| Keywords: | Corporate credit ratings, climate change, climate-economy models, stress testing, economic capital |
| JEL: | E44 G17 Q54 |
| Date: | 2026–03–20 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260010 |
| By: | Steven Yamarik (California State University Long Beach); Florian Horky (National Bank of Slovakia); Jarko Fidrmuc (Zeppelin University) |
| Abstract: | This paper uses the shale revolution as a natural experiment to test the resource curse in American states and Canadian provinces. We use a comprehensive set of unproved reserves of unconventional gas and oil plays for North America in 2010 to identify the impact of resource dependence on state-level economic growth. We estimate a growth regression with mining production (resource dependence), corruption and other long-run determinants. Using least squares, we find no significant link between resource dependence and state-level economic growth. However, by instrumenting resource dependence, we find evidence of a resource curse in that greater mining production (and employment) leads to lower state-level growth. Our resource curse finding is robust to fracking bans and moratoriums, alternative GDP measures and resource abundance (proved reserves). In tests for indirect transmission mechanisms, we find that greater mining activity reduces educational attainment, non-resource tax revenue, and trade openness in North America and increases the price of nontradeables relative to tradeables in the US. |
| JEL: | C21 O13 O51 Q33 R11 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:svk:wpaper:1144 |
| By: | Francisco Blasques (Vrije Universiteit Amsterdam); Siem Jan Koopman (Vrije Universiteit Amsterdam); Anthony van Veen (Vrije Universiteit Amsterdam); Ilka van de Werve (Vrije Universiteit Amsterdam) |
| Abstract: | This paper analyzes the macroeconomic effects of environmental policy transitions using stringency scores from developed and emerging countries. We examine the economic effects of environmental policy transitions across market-based, non-market-based, and technology support policies, along with their aggregate effect captured by the Environmental Policy Stringency index. To assess the economic effects relative to a no-transition scenario, we apply the synthetic control estimation method to construct separate counterfactuals for each treated country and policy category. Our framework standardizes the selection of treatment countries, event years, predictor variables, and donor pools, and incorporates placebo tests to assess the significance of total economic losses. We find that most policy transitions are associated with short-term economic losses, particularly for non-market-based and technology support policies. Placebo tests reveal that technology support transitions generate the largest and most significant losses, while aggregated environmental policy transitions generate smaller but still significant losses. In contrast, market-based and non-market-based policies do not show significant economic effects. These findings highlight the heterogeneous economic responses to environmental policy transitions and demonstrate that, although short-term losses can be substantial, more stringent market-based and non-market-based policies do not inherently constrain long-term economic performance. |
| JEL: | C23 O44 Q58 |
| Date: | 2026–06–11 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260033 |
| By: | Klaus M. Frahm; Leonardo Ermann; Dima L. Shepelyansky |
| Abstract: | According to the recent Wealth Thermalization Hypothesis (WTH) the wealth inequality in the world is described by the Rayleigh-Jeans (RJ) thermal distribution of interacting agents in a society with social stratification. In this concept, the wealth layers of society are associated with energy levels from a nonlinear dynamical system conserving two integrals of motion being total energy and probability norm. This leads to RJ condensation and the formation of a huge poverty phase of low wealth and a tiny oligarchic phase that captures a main part of total society wealth. This RJ phenomenon has similarities with self cleaning in multimode optical fibers and constraint driven condensation in various physical systems. We analyze real Lorenz and Pareto curves for wealth of households in countries and the world, Gross Domestic Product of countries, market capitalization of companies at stock exchange of Hong Kong, Shanghai, London, bitcoin transactions, world trade between countries and show that the WTH theory gives a good description of these curves. On the basis of this comparison we argue that the RJ thermal distribution provides a universal description of wealth inequality in the world. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.17965 |
| By: | Fohlin, Caroline; MacDonald, Noah |
| Abstract: | Using novel data from the notorious 1922 Teapot Dome scandal, we assess costs of informed trading by corrupt officials and company insiders involved in illegal federal oil lease contracts. We estimate insider gains of nearly $300 million (2025 terms). Market makers widened bid-ask spreads for oil stocks, raising costs for all investors. Despite legal insider trading, insiders only partially bid up share prices before public revelation, temporarily evading detection and delaying full information incorporation until salient news coverage broke. Our analysis underscores how cronyism and insider trading distort resource allocation and disadvantage uninformed investors, with lessons for modern regulation. |
| JEL: | D73 G14 N22 P16 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20816 |
| By: | Rodríguez Trilnik, Tomás; Bianchetti, Luca |
| Abstract: | El objetivo del trabajo es caracterizar el campo semántico de la política energética argentina a partir del análisis de un corpus de literatura académica especializada, identificando los términos más relevantes, sus relaciones de coocurrencia y los agrupamientos temáticos emergentes. |
| Keywords: | Minería de Datos; Análisis Semántico; Política Energética; Argentina; |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nmp:nuland:4562 |
| By: | Adam, Christopher; Luk, Paul; Vines, David |
| Abstract: | This paper shows that coordination of monetary policy and fiscal policy can be desirable in the face of a temporary supply side shock. To calibrate our study we use the sharp rise – and subsequent reversion - of energy prices as a result of Russia’s invasion of Ukraine in early 2022. We take as the objective of policy the control of inflation, and the avoidance of a wage-price spiral, without it being necessary to greatly increase interest rates. We show how such a coordinated strategy could make use of a temporary subsidy to consumption following the energy-price shock. We demonstrate that it would be possible to follow such a strategy without creating either excess demand in the short run or Ponzi-game-like fiscal outcomes in the longer run. Our model is a modified version of the new-Keynesian DSGE model due to Christiano, Eichenbaum and Evans (2005) and Smets and Wouters (2007), to which we have added a fiscal-policy process and an energy-sector enclave. We examine the macroeconomic and welfare outcomes of our policy strategy. We show why the welfare outcomes might be better than those which would emerge in the absence of any consumption subsidy, in which case monetary policy would be the only means used to control inflation. We discuss broader implications of our results in the concluding section of the paper. |
| Keywords: | Energy-price shock; Inflation targeting; energy-price subsidy; fiscal and monetary cooperation ; real wage resistance |
| JEL: | E31 E47 E52 E61 E62 E65 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21147 |
| By: | Nano Barahona; Juan-Pablo Montero; Pedro Skorin |
| Abstract: | Vehicle inspections—commonly known as smog and safety checks—are often delegated to private agents, much like other quality certification markets. When these agents compete, they face incentives to misreport quality—especially when consumers do not internalize the external costs of misreporting. Theory and evidence from Chile’s concentrated vehicle-inspection markets suggest that these incentives are significant: misreporting emerges as soon as competition is introduced. We find that delegating each market to a single agent proves effective in reducing approval rates, without compromising service quality or the ex-ante competition for the market, while delivering substantial and permanent reductions in vehicle emissions. |
| JEL: | C72 D43 L51 Q58 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35422 |
| By: | A. Luisi; F. Roccazzella; A. Triantafyllou (Audencia Business School) |
| Abstract: | We examine the time-varying nature of the comovement of the slope of the futures curve in major agricultural, metals and energy commodity futures markets in a Global Vector Autoregressive model. We find significant comovement between the slopes, indicating the co-existence of backwardation and contango in many seemingly unrelated commodity futures markets. The degree of comovement in commodity futures curves intensifies during periods of financial and macroeconomic turmoil and increased geopolitical risk. In contrast, our analysis shows that the gold futures market becomes more backwardated (contangoed) when the rest of the commodity futures markets become more contangoed (backwardated). |
| Keywords: | Time varying Global VAR, Backwardation, Contango, Commodities, Futures markets |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05635286 |
| By: | Erik Ansink (Vrije Universiteit Amsterdam); Frederic Klapwijk (Vrije Universiteit Amsterdam) |
| Abstract: | We study whether the number of tiers in a traffic-light eco-label affects consumer welfare. We develop a model in which consumers observe price, quality, and the label tier, but infer a product's environmental quality ("greenness'") imperfectly. In that setting, adding a tier can improve the information content of the label while still lowering welfare near newly created cutoffs. We then use a discrete choice experiment on trash bags with two-tier and three-tier traffic-light labels to test the behavioral ingredients of the model. Estimated treatment effects in the choice experiment show that adding a middle tier makes respondents more likely to choose the highest label tier, increases price sensitivity, and reduces the use of price as a cue for greenness. We interpret these results as evidence that tier count changes both the choice response to the highest label tier and price-based inference. A structural interpretation also yields a positive estimate of the price-proxy parameter, and the three-tier choice data imply a positive but modest separation between the yellow and green tiers under transparent normalizations. |
| Keywords: | Eco-labels, traffic-light labels, consumer inference, environmental disclosure, consumer welfare |
| JEL: | D12 D83 L15 Q58 |
| Date: | 2026–05–08 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260019 |
| By: | Behnaz Minooei Fard |
| Abstract: | Critical mineral markets over the past decade have exhibited distinctive patterns of nonlinear price adjustment, discontinuous supply responses, and regime dependent behavior. This paper develops a dynamic game theoretical model of strategic extraction in critical mineral markets under a nonlinear supply function. Replacing the linear market reactions standard in the exhaustible resource literature with a partially inverse supply function generates three distinct price-quantity equilibria. Each equilibrium corresponds to a qualitatively different market regime as a constrained low-extraction/high-price state reflecting Chinese supply dominance, an intermediate state of partial Rest of the World (ROW) entry, and a high-extraction/low-price state of full supply diversification. The model is solved using Model Predictive Control (MPC), which parameterizes the degree of strategic foresight. Three scenarios are simulated to assess the effects of policy interventions on extraction dynamics, profitability, and resource depletion. The results show that reducing ROW marginal costs is necessary but not by itself sufficient for supply diversification. Moreover, the results reveal that cost subsidies and support payments have limited impact on depletion speed unless accompanied by a change in market behavior from short-termism to extended decision horizons. |
| Keywords: | Critical minerals, game theory, nonlinear supply function, multiple equilibria, Model Predictive Control, export controls, price jumps, strategic extraction |
| JEL: | C61 C7 Q3 |
| Date: | 2026–06–19 |
| URL: | https://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2026-08 |
| By: | Kai A. Konrad |
| Abstract: | An industrial economics analysis of China’s quasi-monopoly on refined rare earth materials shows: even if China strictly maximizes national prosperity and abstains from geopolitical power play, a significant price differential emerges between the export price and the price for domestic users. The price differential itself is not evidence of geopolitical intentions. However, this equilibrium price gap widens if we assume that China views itself as contesting in a geopolitical, tournament-like situation against the United States. These two results are derived within the framework of a tournament model that imbeds the characteristics of a dominant supplier with a fringe - market, but adds geopolitical goals to the dominant supplier’s objective. |
| Keywords: | Rare earth, monopoly power, China, geopolitics, strategic autonomy, political vulnerability |
| JEL: | F13 F51 L72 Q34 |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2026-06 |
| By: | Denise Dipasquale; Edward L. Glaeser; Adam M. Guren; Paul S. Willen |
| Abstract: | What information do policymakers need to design Pigouvian taxes or subsidies? Standard logic suggests that it is sufficient to know the size of the externality and unnecessary to know about quantities. Yet this logic is incorrect if interventions have fixed costs, taxes create deadweight losses, or there are distributional concerns. We present a model in which these considerations can make it more valuable for policymakers to learn about equilibrium quantities. We apply the model to congestion pricing, which has high fixed costs, and to a proposed housing subsidy in Boston that features deadweight losses and distributional concerns. |
| JEL: | H20 H23 R0 R50 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35376 |
| By: | Sonja Dobkowitz; Claudia Kemfert; Alexander Kriwoluzky; Georg Maxton; Laura Schmitz; Kristin Trautmann |
| Abstract: | Despite decades of ambitious environmental policy, German consumption has continuously exceeded planetary-boundary thresholds in six of seven environmental dimensions since 1995, with little improvement over time. Combining environmentally extended multiregional input–output tables with life-cycle impact assessment, we develop a consumptionbased sustainability indicator across seven impact categories, benchmarked against national planetary-boundary thresholds. Decomposing impacts into scale and impact intensity per euro of production, we find that imports embody more impact per euro than domestic production in every category. A rising import share thus slows aggregate efficiency gains even as intensities fall in both origins, and the growing scale of imports offsets them altogether. We show that had the import share remained at its 1995 level, cumulative impact growth from 1995 to 2022 would have been 12.9 to 96.8 percentage points lower across categories. |
| Keywords: | Planetary boundaries, environmental footprints, global value chains, trade and environment |
| JEL: | C67 F18 Q01 Q54 Q56 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2172 |
| By: | L. Randall Wray |
| Abstract: | The press is full of stories on the cost of President Trump's war of choice against Iran--said to be running at $2 billion a day. With an on-again, off-again ceasefire, that cost may have declined at least temporarily. However, many reports suggest that America's inventory of firepower has been run down by the war in Ukraine plus this latest adventure. Each Tomahawk missile cost about $2 million dollars to make, but at today's costs, replenishing the stockpile could run closer to $4-5 million for each missile. The Patriot missile systems used to shoot down Iranian drones cost about $1 billion each. Typically, two or more missiles are used to take out each drone, so it costs "anywhere from $500, 000 to $4 million" to dispatch a drone that cost $20, 000 to $35, 000--a daunting ratio (Silver 2026; Pow 2025). |
| URL: | https://d.repec.org/n?u=RePEc:lev:levypn:26-3 |
| By: | Anderson, Siwan; Jaramillo Calderon, Daniel |
| Abstract: | This paper investigates whether climate shocks exacerbate gender-based violence perpetrated by armed political actors. To causally identify these effects, we leverage geo-referenced panel data across Africa. Our outcome of interest includes direct killings, abductions, torture, and sexual violence explicitly targeting women and girls. We find that extreme temperature shocks significantly increase the incidence of female-targeted civilian conflict. However, this effect is attenuated in areas where indicators of female empowerment are higher. These findings support the view that gender-based violence under climate stress is more pronounced in contexts where women are socially and economically marginalized, suggesting that social valuation of women plays a critical role in moderating climate-induced conflict dynamics. |
| Keywords: | Conflict |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20935 |
| By: | Martina Opalkova (Faculty of Business and Economics, Mendel University in Brno, Czech Republic) |
| Abstract: | Sustainability is frequently portrayed as a key driver of consumption among Generation Z, yet empirical evidence on whether sustainable values translate into actual purchasing behaviour remains limited, particularly in performance-oriented product categories. This study addresses this gap by examining the determinants of real purchasing behaviour among Generation Z consumers in the running products market. Using survey data from 400 respondents and applying Principal Component Analysis and Partial Least Squares Structural Equation Modelling (PLS-SEM), six latent determinants influencing purchase behaviour are identified. The findings show that actual purchasing behaviour is primarily driven by perceived product quality, durability, comfort, and technological innovation. In contrast, sustainable values show a statistically significant but negative relationship with actual purchasing behaviour, suggesting that sustainability considerations play a comparatively limited role in decision-making within the performance-oriented running products category. These results suggest that sustainability initiatives are more effective when integrated with tangible product performance rather than communicated as standalone value propositions. |
| Keywords: | Consumer decision-making, Purchase behaviour, Sport marketing, Sustainability relevance, Value perception, Behavioural drivers |
| JEL: | M31 D12 Q56 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:men:wpaper:111_2026 |