Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 728: Do Markets Trump Politics? Evidence from Fossil Market Reactions to the Paris Agreement and the U.S. Election
Samson Mukanjari () and Thomas Sterner ()
Additional contact information
Samson Mukanjari: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 GÖTEBORG, Sweden
Thomas Sterner: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 GÖTEBORG, Sweden
Abstract: The Paris Agreement was acclaimed as a milestone for climate negotiations. It has also been criticized – as too soft by environmentalists and too constraining by the current U.S. administration, which has decided to leave. The election of President Trump was itself widely interpreted as unexpected, good news for the fossil industry (and less good for the climate). We seek to evaluate the impact of global climate policy making by studying its effect on the stock market value of energy sector firms. In particular, we study the signing of the Paris Agreement and the latest U.S. presidential election. Using event study and impulse indicator saturation methods, we show that both events had only moderate effects.
Keywords: Climate change; election; event study; impulse indicator saturation; Paris climate agreement; Trump.
53 pages, March 2018
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