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Measuring and assessing the effects of climate policy uncertainty

Author

Listed:
  • Clara Berestycki
  • Stefano Carattini
  • Antoine Dechezleprêtre
  • Tobias Kruse
Abstract
This study proposes a new indicator of Climate Policy Uncertainty based on newspaper coverage frequency. The indicator currently includes 12 OECD Member Countries and covers the period 1990-2018. The index spikes near major political events and during major discussions around potentially significant climate policy changes. Using a global firm-level dataset, the empirical analysis shows that Climate Policy Uncertainty is associated with economically and statistically significant decreases in investment, particularly in pollution-intensive sectors that are most exposed to climate policies, and among capital-intensive companies. In addition to annual series, the study also provides the indicator at higher frequencies of monthly and quarterly levels, and develops sub-indices that capture the direction of climate policy uncertainty associated with a strengthening or a weakening of climate policies for a sub-set of countries.

Suggested Citation

  • Clara Berestycki & Stefano Carattini & Antoine Dechezleprêtre & Tobias Kruse, 2022. "Measuring and assessing the effects of climate policy uncertainty," OECD Economics Department Working Papers 1724, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1724-en
    DOI: 10.1787/34483d83-en
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    Citations

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    Cited by:

    1. Mohammad Arief Rajendra & Sekar Utami Setiastuti, 2023. "Climate Policy Uncertainty and the Demand for Renewable Energy in the United States of America: Evidence from a Non-Linear Threshold Autoregressive Model," Gadjah Mada Economics Working Paper Series 202312012, Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada.
    2. Gasparini, Matteo, 2023. "Are financial markets pricing the net zero carbon transition? A reconsideration of the carbon premium," INET Oxford Working Papers 2023-23, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    3. Beckmann, Joscha & Rogmann, Jennifer, 2024. "Determinants and effects of country ESG controversy," Energy Economics, Elsevier, vol. 131(C).
    4. Thomas Allen & Mathieu Boullot & Stéphane Dées & Annabelle de Gaye & Noëmie Lisack & Camille Thubin & Oriane Wegner, 2023. "Using Short-Term Scenarios to Assess the Macroeconomic Impacts of Climate Transition," Working papers 922, Banque de France.

    More about this item

    Keywords

    beliefs; climate policy; investment; Uncertainty;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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