Arbeitspapier
Carbon Taxes and Stranded Assets: Evidence from Washington State
The climate challenge requires ambitious climate policy. A sudden increase in carbon prices can lead to major shocks to the stock market. Some assets will lose part of their value, others all of it, and hence become “stranded”. If the markets are not ready to absorb the shock, a financial crisis could follow. How well investors anticipate, and thus how large these shocks may be, is an empirical question. We analyze stock market reactions to the rejection of two carbon tax initiatives by voters in Washington state. We build proper counterfactuals for Washington state firms and find that these modest policy proposals with limited jurisdiction caused substantial readjustments on the stock market, especially for carbon-intensive stocks. Our results reinforce concerns about “stranded assets” and the risk of financial contagion. Our policy implications support the inclusion of transition risks in macroprudential policymaking and carbon disclosure and climate stress tests as the main policy responses.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 7785
- Klassifikation
-
Wirtschaft
Asset Pricing; Trading Volume; Bond Interest Rates
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
State and Local Taxation, Subsidies, and Revenue
Regulation and Industrial Policy: General
Environmental Economics: Government Policy
- Thema
-
carbon pricing
financial returns
systemic risk
macroprudential policies
voting
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Carattini, Stefano
Sen, Suphi
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2019
- Handle
- Letzte Aktualisierung
-
10.03.1970, 00:43 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Carattini, Stefano
- Sen, Suphi
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2019
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