nep-res New Economics Papers
on Resource Economics
Issue of 2019‒09‒23
three papers chosen by
Maximo Rossi
Universidad de la República

  1. Public attention to environmental issues and stock market returns By Imane El Ouadghiri; Khaled Guesmi; Jonathan Peillex; Andreas Ziegler
  2. The Macro Effects of Anticipating Climate Policy By Stephie Fried; Kevin Novan; William Peterman
  3. Is Environmental Tax Harmonization Desirable in Global Value Chains? By Haitao Cheng; Hayato Kato; Ayako Obashi

  1. By: Imane El Ouadghiri (Pole Universitaire Leonard de Vinci, Research Center); Khaled Guesmi (Paris School of Business); Jonathan Peillex (Pole Universitaire Leonard de Vinci, Research Center); Andreas Ziegler (University of Kassel)
    Abstract: This paper empirically examines the effect of public attention to climate change and pollution on the weekly returns on US sustainability stock indices (i.e. the DJSI US and the FTSE4Good USA Index) in comparison to their conventional counterparts (i.e. the S&P 500 Index and the FTSE USA). In addition to unexpected global climate-related natural weather disasters, we consider two complementary measures of public attention to these environmental issues: (i) US media attention to climate change and pollution and (ii) the US Google Search Volume Index for these two keywords. Robust to several sensitivity analyses, our econometric analysis for the period from 2004 to 2018 reveals that public attention to environmental issues has a significantly positive (negative) effect on the returns on US sustainability (conventional) stock indices. A possible explanation of this result is that high public attention to environmental issues may drive traditionally sustainable investors, neo-sustainable, and opportunistic self-interested investors to favor stocks of sustainable firms. The insights from our empirical study are important for private and institutional investors, managers of firms, and public policy.
    Keywords: Public attention, environmental issues, stock returns, sustainability stock indices, asset pricing models
    JEL: Q51 G14 Q53 Q54
    Date: 2019
  2. By: Stephie Fried (ASU); Kevin Novan (University of California, Davis); William Peterman (Federal Reserve Board of Governors)
    Abstract: While the U.S. does not currently have a federal carbon tax, households could expect the government will introduce a carbon tax policy in the future. To understand how the macroeconomy responds to the expectation of a potential future carbon tax, we develop a quantitative life cycle model that allows us to focus on investment in long-lived, sector-specific assets such as coal power plants or wind farms. We find that expectations of future climate policy reduce the return dirty (carbon-emitting) energy capital, shifting the economy towards cleaner energy production. As a result, the anticipation of future climate policy reduces carbon emissions even though there is not actual policy in place. In particular, we find that a five percent probability of a \$35 dollar per ton carbon tax reduces emissions by one quarter of the amount they would fall if the carbon tax was actually in place. However, the output cost of reducing emissions through expectations of future policy are considerably higher than the output cost of the carbon tax policy itself. This is because the potential costs of reallocating capital between energy producing technologies after the tax is implemented, such as from coal power plants to wind farms, along with the uncertainty depresses savings lowering the aggregate capital stock.
    Date: 2019
  3. By: Haitao Cheng (Graduate School of Economics, Hitotsubashi University,); Hayato Kato (Graduate School of Economics, Osaka University); Ayako Obashi (School of International Politics, Economics and Communication, Aoyama Gakuin University)
    Abstract: The current globalization is characterized by the spatial unbundling of parts production and assembly, leading to the dispersion of pollution. We study environmental taxes in a two-country model of global value chains in which the location of parts and assembly can di er. When unbundling costs are so high that parts and assembly must co-locate in the pre-globalized world, pollution is spatially concentrated and harmonizing environmental taxes maximizes the global welfare. By contrast, under low unbundling costs triggering the dispersion of parts and thus of pollution in the world today, the harmonization does not maximize the global welfare.
    Keywords: Environmental policy; Fragmentation; International coordination
    JEL: F18 F23 Q56 Q58
    Date: 2019–09

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