|
on Energy Economics |
| By: | Ryan Kellogg |
| Abstract: | Should a jurisdiction seeking to cut greenhouse gas emissions use demand-side climate policies that target fossil fuel consumption? Or should it introduce supply-side policies that target extraction? My analysis points to a policy portfolio rather than an either/or choice. ``Leakage'' of emissions to unregulated jurisdictions can be mitigated by combining standard demand-side carbon emissions pricing with supply-side pricing of carbon extraction. Emissions pricing drives leakage by lowering fossil fuel prices abroad; extraction pricing counteracts this effect. Supply-side climate policies in practice, however, do not broadly price extraction but instead narrowly foreclose investments in fossil fuel infrastructure and are thus inefficient. To reduce carbon demand, an alternative to emissions pricing is support for clean energy. I emphasize reforms to transmission planning and utility governance as crucial for unlocking clean energy resources' potential, and I highlight the case for publicly supporting clean energy R&D, including green industrial policy, to reduce carbon emissions not just at home but also abroad. I close by discussing distributional consequences. Domestically, carbon pricing and clean energy subsidies have sharply different distributional profiles. Globally, carbon extraction pricing would harm low-income countries that are also fossil fuel importers, though there also exist low-income fossil fuel exporters that would benefit. |
| JEL: | F10 Q41 Q48 Q55 Q58 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35830 |
| By: | Sofia P. Baker (Department of Economics, University of Missouri); J. Isaac Miller (Department of Economics, University of Missouri) |
| Abstract: | To balance the tradeoff between economic activity and climate goals by internalizing the cost of emissions, integrated assessment models calculate a social cost of carbon. Embedded in such models are physical energy balance climate models that typically employ temporally constant climate parameters. We examine the empirical effects of changing surface albedo over time. To this end, we leverage satellite data since 2001 in a state-space model in conjunction with an adaptation of the reverse Kalman filter to estimate incoming energy less albedo over 1850-2023. The results show a decreasing albedo trend over most of the sample. Our estimates are consistent with the snow albedo feedback (SAF) where melting ice leads to declines in albedo, thereby causing increased heat absorption at the surface and further melting. Together, these findings indicate that the heating effects of carbon emissions are amplified by the SAF, the omission of which in the carbon pricing decision leads to underpricing. |
| Keywords: | climate change, energy balance climate model, snow albedo effect, carbon pricing |
| JEL: | C32 Q54 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:umc:wpaper:2605 |
| By: | Haldar, Stuti (CIRCLE, Lund University); Peddibhotla, Ananya (Department of Urban Planning and Public Policy, University of California, Irvine); Bazaz, Amir (Indian Institute for Human Settlements) |
| Abstract: | India's commitment to net zero by 2070 has sparked a significant energy transition, prompting policy shifts and infrastructure reconfigurations. This paper explores these transitions within Mumbai's electricity sector, focusing on the informal settlements, where nearly 41 percent (approx. 9 million people) of the city's population resides. Two competing narratives are at play here: top-down imaginaries frame slums as infrastructural disruptions, while grassroots movements emphasize energy justice and livelihood security. We use an inductive case study approach to examine institutional work practices in Mumbai's highly regulated and privatized electricity sector and explore how slum communities resist exclusion and challenge dominant infrastructure narratives. By analysing micro-cases of informal settlements, we show how grassroots action can reshape exclusionary electricity infrastructures and align energy transitions with justice outcomes. Our findings reveal that energy justice for marginalized communities requires creating dynamic spaces for contestation outside of rigid regulatory frameworks. We contribute to the broader understanding of energy transitions as socio-technical processes that intersect with issues of inequality, exclusion, and the risks associated with the twin crises of climate change and energy as an input for development. |
| Keywords: | Energy justice; Informality; Urbanisation; Institutional work; Energy transition |
| JEL: | O17 O18 Q48 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2025_010 |
| By: | Haldar, Stuti (CIRCLE, Lund University); Bazaz, Amir (Indian Institute for Human Settlements) |
| Abstract: | India's green transition is framed as a vision of energy security, developmental ambition, and strategic autonomy. We argue, however, that the expansion of renewable energy in India increasingly depends on financial circuits embedded in the US dollar-centered global credit hierarchy. Through a Global Credit View, we surface how the Indian state pursues energy sovereignty through a strategic dependence - building and deploying public institutions that de-risk projects, stabilise revenue streams, and render renewable infrastructure investable for transnational capital. Focusing on critical institutional nodes, we trace how they convert domestic energy assets into financial claims suited to offshore credit markets. This architecture enables rapid scale-up and preserves state-led directionality in institutional terms, yet it also deepens exposure to currency volatility, global financial cycles, and creditor discipline. India's energy transition, we argue, is therefore not only a techno-industrial project, but also a monetary settlement structured by 'strategic' subordination. |
| Keywords: | Energy transition; Transition finance; Infrastructure governance; Energy gigantism; Global credit hierarchy |
| JEL: | F34 Q43 Q48 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2026_004 |
| By: | Craig-Scheckman, Madeline; Keen, Trissanne; Zhang, Terry; Alavi, Sarasadat; Toman, Michael A. (Resources for the Future) |
| Abstract: | Lithium iron phosphate batteries are important for storing intermittent renewable electricity and powering electric vehicles. This report assesses the extent to which the battery supply chain can be “friendshored, ” now that clean energy tax credits are subject to stringent limits on involvement of “prohibited foreign entities.” This is not simply a matter of where materials are sourced: the regulated battery inputs also include manufacturing equipment, intellectual property, and technology licensing. The requirements are most problematic for the “midstream” segment of the supply chain—the processing of extracted critical minerals. “Upstream” (mineral extraction) and “downstream” (manufacture of battery components) inputs are less likely to be constrained. To be compliant, manufacturers must find new sources, scale up investment, and reduce dependence on technologies developed by prohibited foreign entities. Scenario analysis indicates that the supply chain is unlikely to be sufficiently friendshored before costly restrictions are triggered. Compliance timelines should reflect industrial realities in the sector. |
| Date: | 2026–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-26-12 |
| By: | Pisch, Frank; Carattini, Stefano; Huang, Hanwei; Singh, Tejendra Pratap |
| Abstract: | Although the environmental impact of trade has been a long-standing concern, there is still scant evidence on the channels through which international market access affects pollution. We exploit the unique episode of China’s world market integration in the early 2000s to provide direct empirical evidence on three such mechanisms, corresponding to each pollution scope: direct pollution at firms’ locations (scope-1), indirect pollution from energy generation (scope-2), and indirect pollution from the supply chain (scope-3). We combine granular satellite data on air pollution with detailed information on manufacturing firms and coal power plants, and leverage exogenous foreign demand shocks for identification. Three main findings emerge: exporting firms reduce local pollution; pollution levels around coal power plants rise due to regional export shocks; and upstream suppliers reduce pollution in the face of export demand shocks to downstream firms. Our findings point to China’s reliance on coal power plants to fuel its export-driven growth as one of the main drivers of the rise in pollution. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:162611 |
| By: | Pyddoke, Roger (Swedish National Road and Transport Research Institute (VTI)); Swärdh, Jan-Erik (Swedish National Road and Transport Research Institute (VTI)) |
| Abstract: | This paper estimates the magnitudes of two hypothetical compensation schemes in 2030 if motor fuel prices increase successively to reduce CO2 emissions, with the goal of reaching Swedish policy goals for the transport sector by 2030. The two compensation schemes are examined in two price-increasing scenarios: the first, the ESR Scenario, is designed to fulfill the Swedish EU Effort Sharing Regulation (ESR) commitments as of 2045; the second, the High Price Scenario, with larger price increases, is designed to reach the current Swedish national policy goal for the transport sector. These scenarios are compared with the Reference Scenario, in which the prices increase modestly, implying that the national policy goal is not reached for emissions from private cars, such that the government must instead purchase emission quotas to fulfill EU commitments. We estimate the effects on both fuel expenditure and welfare. Two levels of lump-sum transfers are made to vulnerable car owners in rural areas based on the mean fuel expenditure in each income octile. The results indicate that compensation can reduce average welfare losses from fuel price increases for rural car owners to a level similar to those of average car owners in large cities. Furthermore, the fiscal cost of these transfers is well below the public revenues from increased taxes, even when incorporating realistic administration costs. In the ESR Scenario, the low transfer amounts render it questionable whether compensation is justified. |
| Keywords: | Climate policy; fuel tax; car ownership; fuel consumption; income distribution; spatial distribution; compensation |
| JEL: | D31 H23 Q52 R12 R48 |
| Date: | 2026–10–05 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:vtiwps:2026_008 |
| By: | Jaxa-rozen Marc (European Commission - JRC); Rózsai Máté (European Commission - JRC); Neuwahl Frederik (European Commission - JRC) |
| Abstract: | The climate targets of the European Union (EU) are defined in relation to historical benchmarks: for instance, the European Climate Law requires net domestic greenhouse gas (GHG) emissions to be reduced by at least 55% by 2030 compared to 1990. However, for aviation and maritime transport, primary statistics on emissions are not available at the geographical detail needed to suitably track the contribution of international voyages to domestic emissions. To this end, a suitable calibration methodology was first published in 2024 as part of the Joint Research Centre’s Integrated Database of the European Energy System (JRC-IDEES), harmonizing available statistics to produce an internally consistent decomposition of activity, energy use, and emissions for aviation and maritime transport in the EU and European Economic Area (EEA). The present report documents the updated JRC-IDEES-2024 aviation and maritime methodology, which extends coverage with annual data for 1990-2024 and introduces new policy-relevant indicators such as emissions under the scope of the EU Emissions Trading Scheme. The resulting open-access dataset matches Eurostat energy balances and distinguishes intra-/extra-EU and/or intra-/extra-EEA departures for each EU Member State, each EEA country, and the United Kingdom. As such, it is consistent with the scope of EU climate policies and can inform further research and decision-making. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc148005 |
| By: | Narayanasamy Damodaran, Sanjena |
| Abstract: | Article 6 of the Paris Agreement offers India an opportunity to receive payments from other countries for mitigation outcomes at home, and to channel that revenue towards the vast investment that the low-carbon transition requires. Yet while the country can use international carbon markets to help finance its own decarbonisation, it will need to establish the right framework for approving sales of its Article 6 projects. Without this, there is a risk that India will undermine efforts to hit its near-term climate targets and achieve its 2070 net zero goal. This report explores how the country can establish such a framework. The author argues that India should decide whether to authorise sales of carbon credits under Article 6 based on calibrated questions about what to sell, when to sell it and at what price. |
| JEL: | N0 |
| Date: | 2026–09–29 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:141188 |
| By: | OECD |
| Abstract: | Electricity systems power digital societies and they are undergoing profound change. Distributed sources of generation and storage are transforming legacy electricity systems. Simultaneously, overall electricity demand continues to rise, driven in part by the expansion of digital infrastructure such as data centres, which are essential for both artificial intelligence (AI) training and inference. The application of digital technologies, notably AI, across the electricity system, spanning generation, transmission, distribution, storage and end use, is enabling systems to adapt to these challenges. This paper explores how digital innovations are reshaping electricity systems, and trends in policies. Evidence suggests that public funding for digital innovation in electricity systems is declining relative to overall public energy research and development budgets, raising questions about whether sufficient innovation is available to keep pace with societal demands on the electricity system. The paper concludes with policy considerations to promote and sustain digital transformation across electricity systems. |
| Date: | 2026–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:oec:stiaab:387-en |
| By: | Anna French; Nicholas Vreugdenhil |
| Abstract: | We identify a new channel for regulatory leakage: the “permitting channel”. In many settings, permits lock in the regulatory regime at approval, allowing firms to acquire the option to invest under current rules. Unlike the conventional Green Paradox response, this channel operates without accelerating physical investment and pollution. We develop a framework in which firms can use real options to avoid anticipated regulation. We estimate the framework using Colorado’s oil and gas reforms, where permits surged before regulation but drilling did not. Policy-relevant designs that remove the permitting channel substantially reduce the health risks from pollution despite amplifying anticipatory investment. |
| JEL: | Q0 Q4 Q5 Q52 Q53 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35794 |
| By: | Tatjana Dahlhaus (Bank of Canada); Madan Ghosh (Carleton University); Yena Joo (Bank of Canada); Stephen Murchison (Bank of Canada); Genevieve Nelson (Bank of England); Rachit Lumb (Bank of Canada); Jonathan Swarbrick (University of St Andrews); Alexander Ueberfeldt (Bank of Canada); Raven Wheesk (Bank of Canada); Yinxi Xie (Indiana University, Bloomington); Yang Zhang (Bank of Canada) |
| Abstract: | Climate change presents significant macroeconomic challenges, particularly for small open economies deeply integrated into global trade and energy markets. Focusing on Canada, we analyze the macroeconomic implications of the transition to a low-carbon economy, paying attention to global and domestic spillovers. On the domestic side, we introduce Energy-ToTEM (E-ToTEM), an extension of the Bank of Canada’s Terms-of-Trade Economic Model (ToTEM), which captures energy sector dynamics, substitution effects, and policy interactions. To account for international forces, we use a global, multi-sector, multi-region general equilibrium model, allowing us to assess international climate policy transmission and global demand implications for Canada. Our results indicate that, under the net-zero scenario, global carbon prices rise persistently through 2050. By 2050, world gross domestic product (GDP) is about 8% lower and Canadian GDP about 7% lower relative to a no-policy benchmark, while inflation rises modestly under the historical monetary policy rule. Monetary policy faces a clear trade-off: strict inflation targeting would deepen the Canadian output loss to about 7.5%, whereas a more accommodative stance would limit it to around 5.5%, at the cost of inflation about 1 percentage point above target. Overall, our findings highlight the importance of accounting for both global spillovers and monetary policy when evaluating the macroeconomic consequences of the transition to net zero. |
| Keywords: | macroeconomic simulations; transition to net-zero; climate policies; scenario analysis |
| JEL: | E27 E52 Q43 Q58 |
| Date: | 2026–09–29 |
| URL: | https://d.repec.org/n?u=RePEc:san:econdp:2604 |
| By: | Wolf, Christina (University of Hertfordshire Business School, Department of Economics and Finance); Peeroo, Aleksandra (University of Hertfordshire Business School, Department of Economics and Finance) |
| Abstract: | This article contributes to debates on green discontent, climate-policy acceptance, and the geography of discontent by showing how experiences of (mis)recognition can turn uneven place-based transition readiness into wider political and emotional discontent in left-behind regions. We develop this argument through the case of Germany's domestic energy transition and the implementation of the Building Energy Act ('Heating Law'), which triggered widespread opposition, particularly in socio-economically marginalised regions of East Germany. Using a sequential mixed-methods design, we combine attitudinal segmentation based on nationally representative survey data (n=2, 048) with 33 semi-structured interviews. Our findings show that through processes of misrecognition, climate policies can become vehicles through which long-standing place-based grievances are vindicated and (re)activated. Discontented East German homeowners experienced climate citizenship as contingent on purchasing power, making the transition an acute reminder of uneven development. The implicit assumption of financial readiness was perceived as a misrecognition of lived realities, generating epistemic mistrust. The expectation of financial participation also devalued non-monetary contributions to the transition, vindicating longer-standing experiences of denied social esteem. Finally, the misrecognition of post-unification development trajectories allowed the policy to attach readily to place-based fears of further disruptive transition and decline. Together, these experiences generated emotions of invisibility, disrespect, fear, and betrayal, creating fertile ground for narratives of expropriation, elite hypocrisy, and systemic unfairness. The article highlights the importance of addressing both uneven readiness and uneven acceptance by creating the material conditions for participation while recognising differentiated lived realities, contributions, and histories of marginalisation. |
| Keywords: | Green discontent; Left-behind regions; Just transition; Recognition; Heating transition |
| JEL: | Q56 Q58 R11 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2026_010 |
| By: | Blankespoor, Brian; Dasgupta, Susmita; Wheeler, David |
| Abstract: | Air pollution imposes severe health and economic costs worldwide, yet ground-based monitoring data are difficult and expensive to collect, limiting the information available for policy analysis. This paper develops machine learning models to estimate daily air quality using satellite observations, meteorological data, emissions inventories, and geographic information. Data sources include IQAir ground station reports; atmospheric pollutant concentrations from the European Space Agency’s tropospheric monitoring instrument, TROPOMI; and meteorological data from the Copernicus ERA5 Land database. The paper estimates separate random forest models for fine particulate matter (PM2.5), ozone, nitrogen dioxide, and carbon monoxide, using a random forest algorithm that quantifies variable importance. The results are robust: TROPOMI dominates predictions for fine particulates (PM2.5), nitrogen dioxide, and carbon monoxide, with the Emissions Database for Global Atmospheric Research and meteorological variables providing secondary contributions. For ozone, the meteorological variables are most influential, followed by TROPOMI and the Emissions Database for Global Atmospheric Research. Geographic features matter across all pollutants—elevation, latitude, and coastal proximity consistently rank high, while Köppen-Geiger climate zones vary in importance by pollutant. Temporal tracking is validated by correlating daily monitored versus predicted pollutant levels across urban areas using IQAir ground station data. Median intertemporal correlations exceed 0.69 for all pollutants, with upper quartiles above 0.82 and lower quartiles above 0.53. Although the pilot uses data from April to November 2025, TROPOMI has been available since 2018 and the Copernicus ERA5 Land database provides matching coverage, enabling daily estimates from April 2018 onward on a global terrestrial grid at 0.1-degree resolution. |
| Date: | 2026–09–14 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11448 |
| By: | Michal Vyletelka |
| Abstract: | This paper investigates the reaction of the stock market to corporate carbon neutrality (CN) announcements using a global dataset of 887 earnings call disclosures between 2019 and 2024. Employing event-study style comparisons, industryadjusted returns, and Fama-French factor models, the analysis reveals that CN commitments have limited short-term effects, but are associated with statistically significant negative abnormal returns over a 12-month horizon. The results suggest that investors perceive carbon neutrality pledges as credible signals of future cost burdens rather than value-enhancing strategies. The findings also highlight sectoral and temporal heterogeneity: technology, energy and materials firms exhibit positive return premia, while utilities and real estate underperform; longer-dated CN commitments (post-2040) are priced more favorably than near-term commitments. Regional effects largely disappear once the sector composition is controlled, underscoring the primacy of industry dynamics in shaping market responses. |
| Keywords: | Carbon neutrality, ESG disclosure, stock returns, event study |
| Date: | 2026–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:prg:jnlwps:v:6:y:2026:id:6.005 |
| By: | Kriesch, Lukas (Justus-Liebig-Universität Gießen); Losacker, Sebastian (Justus-Liebig-Universität Gießen) |
| Abstract: | In the transition toward more sustainable energy use, heat pumps play a crucial role. However, large-scale installation of heat pumps has not yet occurred in many countries, often due to locked-in energy technologies and low levels of public acceptance. Given that the diffusion of heat pumps will strongly depend on end-user acceptance, it is important to understand how heat pump technologies are perceived by the public. In this paper, we study the sentiment of news articles about heat pumps to reveal changes in public attitudes toward these technologies over time. We develop a unique dataset encompassing more than 30, 000 German news articles about heat pumps, published between 2018 and 2023, building on CommonCrawl data. We identify news articles about heat pumps using a large language model, and then analyze the sentiment of each article using a pretrained sentiment analysis algorithm. This data is used to identify coherent topics within the corpus of heat pump-related articles, with some topics receiving very positive sentiment scores and others negative. From a longitudinal perspective, our findings reveal a sharp decrease in the mean sentiment of heat pump articles in early 2023, related to the debate about a new heating law during that time in Germany. Our results also show that the sentiment score gradually recovers from this shock. |
| Keywords: | Energy transition; Heat pumps; News data; Natural language processing |
| JEL: | O33 Q42 Q58 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2025_008 |
| By: | Lion Hirth |
| Abstract: | Existing studies consistently find that home batteries and electric vehicles optimized against real-time electricity prices create new load peaks in local distribution grids, because all assets respond to the same price signal in sync. However, all but one of the 18 studies reviewed here treat wholesale prices as exogenous. This paper argues that treating prices as non-responsive biases the result: in reality, charging in low-price hours raises the wholesale price, which dampens the incentive to charge. I test this by simulating households with rooftop solar and home batteries under a spot-based retail tariff, calibrated to German data for 2025 with a model of equilibrium wholesale prices. With exogenous prices, my results confirm the finding from the previous literature: synchronous charging pushes the coincident import peak of the local grid to 83% above its no-battery level. With endogenous prices, the same fleet leaves the peak 6% below the no-battery benchmark. In other words, treating prices as endogenous reduces the coincident peak at high battery penetration nearly by half. This finding is robust across alternative price functions and exogenous price paths, different measures of the coincident peak, 25 scenario variations and three historical years. I conclude that new local peaks remain possible, particularly in grids where battery deployment runs ahead of the national average, but the risk and magnitude are considerably smaller than the existing literature suggests. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.35111 |
| By: | Diego R. Känzig; Maximilian Konradt; Lixing Wang; Donghai Zhang |
| Abstract: | We study how business cycle fluctuations shape the pace and direction of innovation. Non-green innovation is procyclical, while green innovation is countercyclical, both over the cycle and in response to economic shocks. We explain this divergence in a dynamic general equilibrium model with endogenous green and non-green innovation. Green patents derive more value from distant profits, making green innovation less sensitive to short-run fluctuations. Endogenous innovation costs reinforce this mechanism, making green and non-green innovation effective substitutes. Evidence from market-implied patent valuations and scientist earnings supports the mechanism. The model implies larger and greener effects of innovation subsidies during downturns. |
| JEL: | E32 O31 Q55 Q58 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35795 |
| By: | Ngov, Meng Yu; Vézina, Pierre-Louis; Tran, Trang Thu; Nayyar, Gaurav |
| Abstract: | This paper documents how foreign firms, inputs, and subsidies have shaped the development of Viet Nam’s solar panel industry. The analysis uses firmto-firm transaction data from Panjiva as well as firm-level data from the Viet Nam’s Enterprise Survey to trace solar panel value chains. It uncovers three key findings. First, parts and components from subsidizing countries are 30 percent cheaper than alternatives. Those from China, which provides the majority of solar inputs to Vietnamese producers, are cheapest. Foreign green subsidies may thus spill over across countries via value chains. Second, Chinese FDI firms dominate Viet Nam’s solar industry, accounting for 75% of exports and 50 percent of jobs, and they export solar panels that are 38 percent cheaper than those of other producers in Viet Nam. Third, local firms supplying parts and components to these Chinese FDI firms experience positive productivity gains. The findings show how Viet Nam’s solar boom emerged through deep integration into China’s subsidized supply chains. |
| Date: | 2026–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11478 |
| By: | Ayoub Jhabli; Tarek AlSkaif; Kwabena E. Bennin; Bedir Tekinerdogan; Axel Naumann; Joost M. E. Pennings |
| Abstract: | The growing importance of intraday trading in Europe, driven by the increasing penetration of renewable energy sources, has led to higher volatility and periods of market stress. Understanding how order flow behaves under varying liquidity conditions requires models that adapt to the state of the market. This paper proposes a multivariate state-dependent Hawkes process to model the flow of orders across different liquidity regimes in the intraday continuous electricity market. The observed market states are identified using a proposed Liquidity Stress Index (LSI), which quantifies stress using the bid-ask spread in the limit order book, order book volume, and mid-price volatility. Transitions between states induce changes in the intensity parameters, resulting in piecewise dynamics that reflect regime-specific order-flow behavior. The model is calibrated on January-March 2024 Dutch intraday continuous cross-border intraday (XBID) hourly order data from EPEX SPOT. The estimated dynamics show that order flow is strongly self-exciting and near-critical, that executed trades trigger new same-side orders while the reverse effect is negligible, and that liquidity stress mainly strengthens transaction self-excitation rather than reshaping the cross-side structure. Robustness checks over the LSI composition and the state partition show that the results are driven by the regime construction itself: alternative index compositions fit within a narrow band, three states fit better than two, and removing the states clearly degrades the fit relative to a single-regime Hawkes benchmark. The results highlight both the value of conditioning order-flow models on liquidity stress and the limits of a single-exponential specification when event frequencies are highly imbalanced. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.08169 |
| By: | Adrien Bilal; Diego R. Känzig; Krzysztof Lisiecki |
| Abstract: | This paper documents large indirect mortality impacts of climate change. Exploiting natural global temperature variability, we find that 1°C of warming increases annual mortality by 2.5 deaths per 1, 000 individuals, compared to 0.1 deaths per 1, 000 due to the associated local heat exposure. Using external estimates of the impact of global income on mortality, we show that the macroeconomic effects of global temperature changes explain two thirds of the gap between these estimates. We use this evidence to estimate damage functions in a neoclassical growth model that links mortality and economic activity and accounts for adaptation to mortality impacts. Mortality contributes $400 per ton of CO₂ to the Social Cost of Carbon, or one quarter of total climate damages. These results suggest that economic adaptation has a double dividend by also reducing climate-related mortality. |
| JEL: | E01 I15 O44 Q51 Q54 Q58 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35832 |
| By: | Haldar, Stuti (CIRCLE, Lund University); Pugh, Rhiannon (CIRCLE, Lund University); Grillitsch, Markus (CIRCLE, Lund University) |
| Abstract: | As green transitions accelerate, the resulting socio-technical transformations often produce uneven spatial impacts, generating 'green' discontent in peripheral and rural regions. Despite the growing discourse on 'just transition', regional policy models frequently overlook the multidimensional nature of justice. Through this study we explore how justice can be conceptualized and operationalized within regional green transitions? Theoretically, we propose a framework – the justice doughnut- that positions the trivalent approach (distributional, procedural, and recognitional justice) in regional development. We situate this framework amidst the evolving tensions between top-down 'directionality' (driven by sustainability mandates and strategic autonomy) and bottom-up 'subsidiarity' (rooted in place-based policy). We hence recontextualise justice as a mutually constitutive space that mediates the governance of regional transformations. Empirically, we illustrate this framework with a case study in Jämtland-Härjedalen, a peripheral region in North Sweden, vital to national transition ambitions. Employing an abductive, multi-method qualitative design - incorporating policy analysis, stakeholder interviews, and deliberative workshops- we examine the multilevel interactions between local, national, and EU actors. The findings reveal pervasive asymmetries in resources and legitimacy, alongside significant intra-regional differentiation. By highlighting how governance logics shape justice outcomes, we offer a generative lens for rethinking just regional development. We, hence, contribute to a deeper understanding of the institutional conditions necessary to reconcile national transition goals with regional equity in peripheral European contexts. |
| Keywords: | Regional development; Directionality; Subsidiarity; Just transition; Peripheral regions |
| JEL: | Q56 Q58 R11 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2026_002 |
| By: | International Monetary Fund |
| Abstract: | Despite the challenging external environment, the GCC economies have been resilient. Non-hydrocarbon activity has remained robust amid strong domestic demand supported by the reform momentum, limited spillovers from regional, as well as the modest direct impact of higher U.S. tariffs given the exemption of energy products and limited trade ties with the U.S. While external balances narrowed amid oil production cuts and robust imports, the external positions remain overall strong. The economic outlook remains favorable but risks are tilted to the downside amidst elevated global uncertainty. Economic activity will be supported by the unwinding of oil production cuts, the expansion of natural gas production, and strong reform and project implementation facilitated by ample policy buffers. External buffers would remain comfortable despite narrower current account balances driven by higher imports. The near-term risks to the outlook are tilted to the downside, as oil prices could decline and financial conditions tighten amid high uncertainty. Over the medium term, ongoing global structural shifts pose two-sided risks for the GCC economies. |
| Keywords: | Gcc country; IMF staff; GCC economy; labor market; oil price; Oil prices; Oil; Macroprudential policy; Global; Middle East; Central Asia; Africa; Caribbean |
| Date: | 2025–12–06 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfpps:2025/043 |
| By: | Selvaraju, Sangeeth; Srivastava, Shantanu; Jena, Labanya Prakash |
| Abstract: | The National Institution for Transforming India (known as NITI Aayog), in its 2026 report on India’s net zero financing needs, estimates the nation requires US$22.7 trillion in cumulative investment by 2070 to achieve net zero emissions. This policy brief assesses the distance between that investment ambition and the domestic financial system’s current capacity to deliver it. The authors suggest the NITI report’s recommendation for the formation of a new dedicated financial institution focused on blended finance structuring deserves serious attention and note three emerging priority areas (i.e. power, transport and industry) for closing the net zero financing gap. |
| JEL: | F3 G3 N0 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140338 |
| By: | Pym Manopimoke; Nuwat Nookhwun; Tanaporn Sriklay; Tanisa Tawichsri |
| Abstract: | In an open emerging market economy, firm inflation expectations are not simply noisy survey responses; instead, they are a state-dependent transmission channel through which global shocks affect firm behavior. Using monthly firm-level survey data from Thailand between 2012 and 2023, we show that short-term expected inflation—though biased and highly dispersed— responds systematically to macroeconomic conditions, particularly global inflation and oil prices. This response is state dependent, with firms exhibiting more attention during periods of higher inflation and stronger economic growth. Moreover, salient global shocks such as negative oil supply news shocks can lead to persistent and upward revisions in inflation expectations, particularly when inflation is high, while domestic shocks such as the minimum wage hike in Thailand during 2012–2013 only had modest and short-lived effects. Finally, using oil supply news shocks as an instrument, we find strong evidence of state-dependence for the influence of firms’ inflation expectations on business decisions. Price-setting and employment decisions are only significant in higher inflation episodes, while higher expected inflation drags firms’ investment, particularly during periods of lower growth. |
| Keywords: | Firm inflation expectations; Emerging markets; Oil shocks; Minimum wage; Price-setting; Investment; Employment; State-dependence |
| JEL: | E31 D84 O11 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:pui:dpaper:265 |
| By: | Sourav Bose; Taoufik Bouraoui |
| Abstract: | While corporate sustainability mandates are expanding, the systemic reliance on self-reported emissions data exposes financial markets to pervasive greenwashing. Current literature relies heavily on subjective ESG ratings or textual sentiment analysis, leaving a critical econometric gap in objectively quantifying physical climate realities. To resolve this information asymmetry, we fuse U.S. SEC financial fundamentals with facility-level EPA greenhouse gas registries to establish a mathematically guaranteed baseline of physical corporate emissions. Leveraging a gradient boosting architecture and Mondrian Conformal Prediction, we quantify the shortfall between self-reported data and this algorithmic baseline into a novel Conformal-Weighted Continuous Divergence (CWCD) metric. Evaluating this divergence via a cross-sectional lead-lag econometric design, we uncover a robust mechanism of market discipline: algorithmic emissions divergence exhibits a severe, statistically significant negative relationship with subsequent market valuation (Tobin's Q) and operational profitability (ROA). Providing definitive evidence against the market blindness hypothesis, this study proves that institutional capital actively prices environmental deception not merely as an ethical lapse, but as a leading indicator of fundamental corporate mismanagement. Ultimately, these findings provide the quantitative justification necessary for asset managers and regulators to deploy algorithmic auditing infrastructure at scale. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.02225 |
| By: | Alyssa Vespuce Desvarieux (Rennes SB - Rennes School of Business); Taoufik Bouraoui (Rennes SB - Rennes School of Business) |
| Abstract: | This article analyzes the impact of ESG (Environmental, Social and Governance) performance on US companies' profitability. We used as proxies CO2 emissions for the environmental component, job satisfaction and gender pay gap for the social pillar, and ethnic diversity on board for the governance pillar. We implemented a Vector Error Correction Model (VECM) using monthly data during the period from December 2008 to January 2022. Our results reveal that, in the long-term, increasing ethnic diversity on board and reducing gender pay gap contribute to an enhancement in profitability. However, in the short-term, companies' financial performance is found to be affected positively by CO2 emissions and negatively by ethnic diversity on board. Overall, the potential for increased company's performance and the well-being of society when ESG considerations are effectively integrated into corporate strategies should encourage companies to include ESG practices into their business models. |
| Keywords: | Sustainable finance profitability ESG Vector Error Correction Model, Vector Error Correction Model, ESG, profitability, Sustainable finance |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05743284 |