Carbon and inflation

Ángel Pardo

Finance Research Letters, 2021, vol. 38, issue C

Abstract: This paper investigates whether European Union Allowances (EUAs) can serve as an inflation hedge for two economic areas, four euro countries and two non-euro countries. The Extended Fisher Hypothesis is tested and the evidence shows a strong positive relationship between EUA returns and the unexpected inflation component in all the economic areas or countries analysed, except for the US. Therefore, EUAs are able to provide a hedge against unanticipated inflation rates.

Keywords: EUAs; HICP; Inflation hedge (search for similar items in EconPapers)
JEL-codes: G10 G11 G19 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:38:y:2021:i:c:s1544612320301616

DOI: 10.1016/j.frl.2020.101519

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