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Do Markets Trump Politics? Evidence from Fossil Market Reactions to the Paris Agreement and the U.S. Election

Samson Mukanjari and Thomas Sterner

No 728, Working Papers in Economics from University of Gothenburg, Department of Economics

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. (search for similar items in EconPapers)
JEL-codes: G14 Q40 Q54 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2018-03
New Economics Papers: this item is included in nep-ene, nep-env, nep-hpe and nep-reg
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