Climate News and Asset Valuations: Insights from Latin America

Muhsin Çiftçi and Christina Kolerus

No 2025/037, IMF Working Papers from International Monetary Fund

Abstract: We study the impact of climate-related news on asset prices in eight Latin American countries. We use both newspapers and official announcements to construct daily, country-specific indices via textual analysis, reflecting media coverage of transition risks, climate opportunities, regulatory actions, and physical risks. Leveraging an unbalanced daily panel data set of 628 firms from 2000 to 2023, we find a significant and robust climate risk premium in Latin America, which is higher for "browner" firms and has increased in more recent years. Focusing on major climate policies announced in official gazettes after the legislative process has been completed, we show that the publication of the laws is associated with a protracted decline in the relative stock prices of high-emission firms.

Keywords: Climate Change; Climate Risk Premium; Financial Asset Pricing; Textual Analysis; climate news; climate policy news; climate opportunity; University Frankfurt IMF; Return on investment; Greenhouse gas emissions; Climate policy; Caribbean; Global (search for similar items in EconPapers)
Pages: 66
Date: 2025-02-07
New Economics Papers: this item is included in nep-ene and nep-env
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=561603 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2025/037

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().