Green stocks and monetary policy shocks: Evidence from Europe

Michael Bauer, Eric A. Offner and Glenn D. Rudebusch

No 215, IMFS Working Paper Series from Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)

Abstract: Policymakers and researchers worry that the low-carbon transition may be inadvertently delayed by higher global interest rates. To examine whether green investment is especially sensitive to interest rate increases, we consider the effect of unanticipated monetary policy changes on the equity prices of green and brown European firms. We find that brown firms, measured in terms of carbon emission levels or intensities, are more negatively affected than green firms by tighter monetary policy. This heterogeneity is robust to different monetary policy surprises, emission measures, econometric methods, and sample periods, and it is not explained by other firm characteristics. This evidence suggests that higher interest rates may not skew investment away from a sustainable transition.

Keywords: monetary transmission; carbon premium; ESG; climate finance (search for similar items in EconPapers)
JEL-codes: E52 G14 Q54 Q58 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-eec, nep-ene, nep-env, nep-fdg and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/308032/1/1912205823.pdf (application/pdf)

Related works:
Working Paper: Green Stocks and Monetary Policy Shocks: Evidence from Europe (2024)
Working Paper: Green Stocks and Monetary Policy Shocks: Evidence from Europe (2024)
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:zbw:imfswp:308032

Access Statistics for this paper

More papers in IMFS Working Paper Series from Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().