Big News: Climate Change and the Business Cycle

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Zitierfähiger Link (URI): http://hdl.handle.net/10900/138652
http://nbn-resolving.de/urn:nbn:de:bsz:21-dspace-1386521
http://dx.doi.org/10.15496/publikation-80003
Dokumentart: Wissenschaftlicher Artikel
Erscheinungsdatum: 2023-03-21
Sprache: Englisch
Fakultät: 6 Wirtschafts- und Sozialwissenschaftliche Fakultät
Fachbereich: Wirtschaftswissenschaften
DDC-Klassifikation: 330 - Wirtschaft
Schlagworte: Economics
Freie Schlagwörter:
Climate change
Disasters
Expectations
Survey
Monetary policy
Business Cycle
Natural rate of interest
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Abstract:

News drive expectations about the economy’s future fundamentals. Climate change is big news: it will impact the economy profoundly but the effect will take some time to materialize in full. Climate-change expectations thus offer a unique opportunity to study the impact of news on the business cycle. We measure these expectations in a representative survey of US consumers. Respondents expect not much of an impact on GDP growth, but perceive a high probability of costly, rare disasters—suggesting they are salient of climate change. Furthermore, expectations vary systematically with socioeconomic characteristics, media consumption, various information treatments and over time. We calibrate a New Keynesian model with rare disasters to key results of the survey and find that shifts in climate change expectations operate like demand shocks and cause sizeable business cycle fluctuations.

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