5th ECOFI & CRECC Research Seminar
The ECOFI department and the Center of Research for energy and Climate Change (CRECC) are glad to host, as guest speaker, Dr. Panagiota Makrychoriti, Birkbeck, University of London, UK.
The relationship between Climate Risk, Climate Policy Uncertainty, and CO2 emissions: Empirical Evidence from the US
Abstract
This paper examines the relationship between climate risk and climate policy uncertainty and CO2 emissions in the US, with an aim to contribute to the better understanding of the drivers of emissions. We proxy for climate risk using the cost of natural disasters, and for policy uncertainty the Climate Policy Uncertainty (CPU) Index of Gavriilidis (2021). For the empirical analysis we employ a structural FactorAugmented Vector AutoRegression (FAVAR) model with a two-step principal component analysis, using a balanced panel of 117 monthly variables, to capture US economic conditions for the period 2000 to 2022. The results indicate that a significant percentage of the variance of CO2 emissions in the US, is explained by Natural Disasters Cost, which also seem to account for a significant percentage of the US Total Renewable Energy Consumption variance. Shocks to disaster costs seem to decrease all type of emissions significantly and also increase renewable energy use significantly. The occurrence of natural disasters increases the political disagreement among U.S. politicians, as well as, the climate policy uncertainty, highlighting the need for efficient policymaking and regulations. When we replace the climate risk proxies with the CPU Index, results are qualitatively similar; in addition, there is a strong impact of CPU on US Total Renewable Energy Consumption. In further results, we find that an increase in Partisan Conflict decreases emissions and explains a significant amount of renewable energy variance.
Dr. Panagiota is a lecturer in Financial Management. She served as an adjunct lecturer and module leader at both the BSc and MSc programmes in the Department of Accounting and Finance, Athens University of Economics and Business (AUEB), teaching modules such as “Advanced Portfolio Management” and “Behavioral Finance”.Her research interests lie in the areas of monetary policy, credit risk, international macroeconomics, behavioral finance, economic modeling, quantitative financial analysis and financial econometrics. She has received research funding from the General Secretariat of Research and Technology (GSRT, Greece) and the Research Centre at Athens University of Economics and Business during her Post-Doctoral Fellowship. Her research has appeared in journals including the Journal of Economic Behavior & Organization, Journal of Banking and Finance and Journal of Financial Stability. Panagiota also serves as a reviewer in high impact journals.