OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Measuring and assessing the effects of climate policy uncertainty

This study proposes a new indicator of Climate Policy Uncertainty based on newspaper coverage frequency. The indicator currently includes 12 OECD Member Countries and covers the period 1990-2018. The index spikes near major political events and during major discussions around potentially significant climate policy changes. Using a global firm-level dataset, the empirical analysis shows that Climate Policy Uncertainty is associated with economically and statistically significant decreases in investment, particularly in pollution-intensive sectors that are most exposed to climate policies, and among capital-intensive companies. In addition to annual series, the study also provides the indicator at higher frequencies of monthly and quarterly levels, and develops sub-indices that capture the direction of climate policy uncertainty associated with a strengthening or a weakening of climate policies for a sub-set of countries.


Keywords: beliefs, investment, Uncertainty, climate policy
JEL: G10: Financial Economics / General Financial Markets / General Financial Markets: General; O32: Economic Development, Innovation, Technological Change, and Growth / Innovation; Research and Development; Technological Change; Intellectual Property Rights / Management of Technological Innovation and R&D; D83: Microeconomics / Information, Knowledge, and Uncertainty / Search; Learning; Information and Knowledge; Communication; Belief; Unawareness; Q58: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environmental Economics: Government Policy; D22: Microeconomics / Production and Organizations / Firm Behavior: Empirical Analysis
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