The Unassuming Economist

From a paper by by Luca Bettarelli, Davide Furceri, Michael Ganslmeier, Marc Tobias Schiffbauer:

“Beyond its environmental damage, climate change is predicted to produce significant economic costs. Combining novel high-frequency geospatial temperature data from satellites with measures of economic activity for the universe of US listed firms, this article examines a potentially important channel through which global warming can lead to economic costs: temperature uncertainty. The results show that temperature uncertainty—by increasing power outages, reducing labor productivity, and increasing the degree of exposure of firms to environmental and non-political risks, as well as economic uncertainty at the firm-level—persistently reduce firms’ investment and sales. This effect varies across firms, with those characterized by tighter financial constraints being disproportionally more affected.”

From a paper by Nafeesa Yunus:

“This study examines the impact of aggregate oil shocks and disentangled oil shocks on U.S. and seven major securitized real estate markets. Oil is integrated with the markets and leads them over the long-run. The short-run impact of oil shocks on the markets is negative. A disentangled analysis of oil shocks reveals that supply and demand shocks have differential impacts. Over the long-run, supply shocks have little impact, while demand shocks contribute significantly to common trends and lead each market. In the short-run, demand shocks have positive effects on each market, whereas supply shocks have negative but lesser effects.”

From a paper by Ihtisham Hussain, Abdul Saqib, and Hooi Hooi Lean:

“Alleviating environmental damage has become a significant challenge for BRICS countries, where economic progress amidst urbanization and fossil fuel consumption pollutes the environment. In this context, BRICS countries must transition from fossil fuels to green energy to sustain their economic progress and protect the environment. However, economic policy uncertainty may affect their fight against climate change and their actions towards environmental sustainability. Therefore, this study examines the roles of economic policy uncertainty and green energy in the environmental sustainability of BRICS countries. Under the STIRPAT framework, we employ a novel augmented autoregressive distributed lag model. Our results show that green energy has a negative and significant impact on carbon emissions and temperature. Moreover, economic policy uncertainty aggravates carbon emissions and temperature in India and Russia. But it was found to reduce carbon emissions and temperature in Brazil and China. To better address the impacts of policy uncertainty on environmental outcomes, Brazil and China should expand renewable energy investments and stabilize economic policies, while India and Russia could prioritize the transition to cleaner technologies and reduce their reliance on fossil fuels to enhance environmental sustainability.”

From a paper by Hugo Morão:

“This study quantifies the impact of European Union Emissions Trading System (EU ETS) on inflation and key macroeconomic variables in the Euro Area (EA). Using a structural vector autoregression (SVAR) model, the analysis reveals that stricter climate policies significantly affect industrial production, unemployment, and inflation in transportation, utilities, and food sectors. Furthermore, the post-2020 regulatory adjustments in emissions caps and allowances have contributed to recent consumer price increases, an effect amplified by the COVID-19 pandemic and geopolitical tensions. The findings suggest the European Commission underestimated the macroeconomic consequences of EU ETS Phase 4. This highlights the need for a more flexible climate policy approach that balances environmental goals with macroeconomic stability.”

From a paper by Jangho Yang and Christian Schoder:

“This study examines the impact of temperature uncertainty on firm fixed capital growth using a unique dataset that merges extensive firm-level financial data with detailed gridlevel weather data. The analysis reveals a strong negative relationship between temperature uncertainty and fixed capital growth. Furthermore, the impact varies significantly across industries with differing levels of investment irreversibility and among countries with varying income levels. Firms in industries characterized by high investment irreversibility and those operating in higher-income countries experience more pronounced declines in fixed asset growth due to temperature uncertainty.”