nep-res 2024-12-30 papers

on Resource Economics

Issue of 2024–12–30
two papers chosen by
Maximo Rossi, Universidad de la RepÃÃººblica

Does Climate Affect Investments? Evidence from Firms in the United States By Petre Caraiani; Carolyn Chisadza; Rangan Gupta
Income Taxation and Ability Rank By Aronsson, Thomas; Johansson-Stenman, Olof

Does Climate Affect Investments? Evidence from Firms in the United States

By:	Petre Caraiani (Institute for Economic Forecasting, Romanian Academy; Bucharest University of Economics Studies); Carolyn Chisadza (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)
Abstract:	This study updates the existing literature on the adverse effects of climate change on firms' performance by providing an alternative perspective that climate change can have potential growth benefits. We examine the effects of climate shocks on firms' investments. Using a spatial autoregressive model with United States (U.S.) firm-level data from 1985 to 2019, we find that increased frequency of climate shocks is positively associated with investments for firms, with larger spillover effects on neighbouring firms. These findings remain consistent for various robustness checks which include sub-sample analysis, different outcome variables and controlling for financial characteristics of the firms. The results highlight that contrary to current evidence, climate change can create incentives for firms to increase investments in adjusting their production processes to cleaner technologies.
Keywords:	Climate shocks, Corporate investments, Spatial econometrics, Production network structure
JEL:	C31 D24 D92 Q54
Date:	2024–11
URL:	https://d.repec.org/n?u=RePEc:pre:wpaper:202448

Income Taxation and Ability Rank

By:	Aronsson, Thomas (Department of Economics, Umeå University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, University of Gothenburg)
Abstract:	A substantial body of empirical and theoretical research suggests that individuals care about, and derive instrumental benefits from, their rank in society. This paper extends the Mirrleesian model of optimal income taxation to a framework where individuals derive utility from their perceived ability rank. Such concerns generate externalities that tend to increase the optimal marginal tax rates for both corrective and redistributive reasons. While empirical evidence on the magnitude of these concerns is limited, their potential impact on optimal income taxation could be substantial, with top marginal income tax rates potentially exceeding 90%.
Keywords:	Redistributive taxation; ability; ordinal comparisons; externalities
JEL:	D62 D82 D90 H21 H23
Date:	2024–12–17
URL:	https://d.repec.org/n?u=RePEc:hhs:umnees:1031

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