Veranstaltung
27
FEB 2024

14:15 - 15:45
IWH Research Seminar

The Heterogeneous Effects of Carbon Pricing: Macro and Micro Evidence

This paper investigates the economic effects of carbon pricing policies using a panel of countries that are members of the EU Emissions Trading System.

Wer
Federico Di Pace  (Bank of England)
Wo
IWH, conference room and via Zoom
Federico Di Pace

Zur Person

Federico Di Pace is an Research Advisor at Bank of England. His research areas are Monetary Economics, Macro-Labour, International Economics and Applied Econometrics.


To join the lecture via Zoom, please register here.

This paper investigates the economic effects of carbon pricing policies using a panel of countries that are members of the EU Emissions Trading System. Carbon pricing shocks lead, on average across countries, to a decline in economic activity, higher inflation, and tighter financial conditions. These average responses mask a large degree of heterogeneity: the effects are larger for higher carbon-emitting countries. To sharpen identification, we exploit granular firm-level data and document that firms with higher carbon emissions are the most responsive to carbon pricing shocks. We develop a theoretical model with green and brown firms that accounts for these empirical patterns and sheds light on the transmission mechanisms at play.

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