We study how managers mitigate the negative impacts of environmental shocks. Pairing productivity data from a garment firm with granular measures of air pollution, we show that productivity suffers as a result of pollution shocks but that managers respond by reallocating particularly sensitive workers to improve worker-to-task matches, thus mitigating team productivity losses. Responses are smaller

We present a new model of asset prices in which a representative agent has extrapolative beliefs about stock market returns and Epstein-Zin preferences. The model quantitatively explains facts about asset prices, return expectations, and cash-flow expectations. When the agent’s beliefs about stock market returns are calibrated to survey expectations of investors, the model generates excess volatility

Due to ongoing efforts for decarbonization, electricity markets worldwide are undergoing fundamental transitions, which result in increased uncertainty for all market participants. Against this background, we investigate the impact of risk aversion on investment and market operation in markets with different congestion pricing regimes and multi-level decision making. We develop a stochastic multi-level

This paper employs a new framework, the high-dimensional conditional Value-at-Risk (CoVaR) connectedness based on the LASSO-VAR model, to explore the conditional financial contagion among a specific system conditional on extreme events occurring outside the specific system and its extreme risk spillovers to the system from the systemic perspective. Then, this paper employs the delta CoVaR and CoVaR

The German government is aiming for a climate-neutral building stock before 2050 to meet the defined goals of the Climate Action Plan 2050. Increasing the building stock's energy efficiency is therefore a high priority, and investments by private homeowners will greatly influence this, as around 46.5% of German homes are owner-occupied. To identify the possible monetary benefits of investments in energy

Considering the continuing slowdown of the improvement in energy intensity around the world, it is essential to seek a more effective measure to address the dilemma of energy and sustainable development. To this end, this research attempts to provide fresh insight into the determinants of energy intensity from the perspective of industrial robots and an industry-based view. By applying the dynamic

While there is almost unanimous consent among scientists that climate change is real and has detrimental consequences, there is a sizable number of people who are skeptical towards these propositions and who are not worried by climate change. In an attempt to understand the basis of climate skepticism, we look at the role of intolerance, a culturally transmitted attitude to the effect that people with

Common resources may be managed with inefficient policies for the sake of equity. We study how rationing the commons shapes the efficiency and equity of resource use in the context of agricultural groundwater use in Rajasthan, India. We find that rationing binds on input use, such that farmers, despite trivial prices for water extraction, use roughly the socially optimal amount of water on average

Asia has built 90% of new coal-fired capacity worldwide in the past 20 years, attracting billions of dollars of foreign investment. This paper explores how such foreign investment has affected the environmental performance of a set of 2108 Asian coal power plants. The findings suggest that foreign-funded power plants are on average 3.4% cleaner in terms of carbon dioxide (CO2) emissions intensity than

This study examines the diversification and hedging benefits of green investments for conventional stock portfolios in the context of the recent COVID-19 pandemic. While the findings confirm the status of gold as a strong hedge against stock market downturns, we find that clean energy investments, green bonds, in particular, have the potential to serve as a safe haven as well. In fact, compared to

An essential part of entrepreneurial activity is the drafting and narrating of an entrepreneurial vision. This study is premised on the observation that entrepreneurial groups form an interaction arena for the practice of imagining the future and asks how the content of entrepreneurial visions is shaped by the conditions of the group. Taking an entrepreneurship-as-practice lens, which we enrich with

In this paper, we investigate the asymmetric relation between the price of crude oil and U.S. aggregate real stock returns. In doing so, we estimate a nonlinear bivariate structural vector autoregression that includes the effects of oil price volatility on stock returns. We use the estimates of our nonlinear model to calculate the responses of stock returns to unexpected increases and decreases in

Modern investors face a high-dimensional prediction problem: thousands of observable variables are potentially relevant for forecasting. We reassess the conventional wisdom on market efficiency in light of this fact. In our equilibrium model, N assets have cash flows that are linear in J characteristics, with unknown coefficients. Risk-neutral Bayesian investors learn these coefficients and determine

We introduce the scaled principal component analysis (sPCA) method to forecast oil volatility, and compare it with two commonly used dimensionality reduction methods: principal component analysis (PCA) and partial least squares (PLS). By combining the simple autoregressive model with the three dimensionality reduction methods, we obtain several interesting and notable findings. First, the model with

A large theoretical literature studies the effects of creditor control during bankruptcy proceedings on firm outcomes. Empirical work in this area mainly examines reforms to creditor control rights during liquidation. In this paper, we use administrative microdata and exploit a legal reform in Denmark to provide the first causal estimates of creditor empowerment in reorganization-the complementary

In a globalized world with high international factor mobility, crises often spread quickly over large parts of the world. Politicians carry a vital interest in keeping crises as small and short as possible. Against this background we study whether the type of company of owner-managed SMEs, in Germany well-known as Mittelstand firms, helps increasing an economy’s crisis resistance. We study this issue

We exploit a mortgage reform that differentially unlocked home equity across the Danish population and study how this impacted selection into entrepreneurship. We find that increased entry was concentrated among entrepreneurs whose firms were founded in industries where they had no prior work experience. Nevertheless, we find that marginal entrants benefiting from the reform had higher pre-entry earnings

In this study, a net social cost framework is applied to provide insights on policy issues relating to the cross-border trade in waste fuel. We estimate the net social cost of using imported waste fuel in a highly efficient combined heat and power plant (CHP) in a cold climate by considering both private costs and benefits as well as external costs related to energy production, alternative waste management

Compared to their male peers, female entrepreneurs tend to face greater obstacles in raising venture funding from business angels, venture capitalists, and financial institutions. In this paper, we investigate whether this gender gap also exists in equity crowdfunding. Based on data from the German equity crowdfunding market, we find that ventures with and without female managing directors are equally

Several factors affect the capital structure of start-ups. In this study, we compare the capital structure choices of accelerated and non-accelerated start-ups to evaluate the role of accelerated programmes on the capital structure decisions for start-ups. Using a comprehensive database provided by Emory University, we find that accelerated start-ups have higher external equity ratios than non-accelerated

We study the formation of an entrepreneurial network in an environment, in which entrepreneurs who are contesting with each other for the development of a new venture have the possibility to collaborate. On the one hand, such bilateral knowledge collaborations are beneficial because they allow the integration of external knowledge. On the other hand, external knowledge collaborations reduce an entrepreneur’s

In energy policy, efficiency improvements are conventional means for reducing industrial energy use as well as related environmental and climate externalities. Unfortunately, the effectiveness of energy efficiency improvements in reducing energy use is known to be limited by rebound effects. These rebound effects arise from economic and behavioral responses to the energy efficiency improvements themselves

Using one-minute oil, gold and copper futures price from September 27, 2009, to July 1, 2020, this paper examines the effects of systematic and idiosyncratic (market-specific risk) jumps on intraday correlations, portfolio allocation decisions, and diversification benefits. We identify that these commodities contain high proportions of market-specific price discontinuities, which do not translate into

We study the long-term impact of climate change on economic activity across countries, using a stochastic growth model where productivity is affected by deviations of temperature and precipitation from their long-term moving average historical norms. Using a panel data set of 174 countries over the years 1960 to 2014, we find that per-capita real output growth is adversely affected by persistent changes

Imperfect information in rental sector and housing-induced returns heterogeneity among occupiers are typically estimated with cross-sectional single-equation models. This approach leads to the estimation of conspicuous wedges in insulation investment propensity between tenants vs owner–occupiers (≥20 percentage points) and low-return vs high-return dwellings households (0.10–0.20pp) in the UK. I analyse

We examine, using aggregate and sectoral U.S. data for the period 2008–2020, the predictive power of disentangled oil-price shocks for Real Estate Investment Trusts (REITs) realized market variance via the heterogeneous auto-regressive realized variance (HAR-RV) model. In-sample tests show that demand and financial-market-risk shocks contribute to a larger extent to the overall fit of the model than

Individuals typically differ in their identities—the behaviors they deem ideal for themselves and for the members of their network—and in their tolerance for behaviors that deviate from their ideals. This paper studies compromise—that is, departures from one’s ideal point, to be accepted by others. I show that an individual’s compromise in equilibrium is bounded by the difference between her tolerance

Journal of Political Economy, Volume 129, Issue 12, December 2021.

Journal of Political Economy, Volume 129, Issue 12, December 2021.

Journal of Political Economy, Volume 129, Issue 12, Page 3549-3555, December 2021.

Journal of Political Economy, Volume 129, Issue 12, Page 3546-3546, December 2021.

Journal of Political Economy, Volume 129, Issue 12, December 2021.

Faced with the threat of climate change many countries are promoting renewable energies to decarbonize their energy system. A common policy to foster electricity from renewable energy sources are feed-in tariffs which are financed by surcharges on electricity prices. Higher electricity prices in turn raise concerns on regressive distributional impacts. In this paper, we investigate the distributional

Amidst considerable debate on the relationship between entrepreneurship and economic inequality, scholarship only indirectly addresses how entrepreneurship informs individuals’ relative well-being. We theorize on the nuanced relationship between entrepreneurship and equality of eudaimonic well-being through the lens of New Institutional Economics. Drawing on theories of human flourishing, we suggest

We study the interest rates of privately securitized residential mortgages during the credit boom of the early 2000s. They reveal a sharp and persistent drop in the spread between mortgage and Treasury rates starting in the summer of 2003. The emergence of this mortgage rate conundrum immediately followed the collapse of an unprecedented refinancing wave, and it was more pronounced in the regions where

We re-examine the puzzling pattern of lead-lag returns among economically-linked firms. Our results show that investors consistently underreact to information from lead firms that arrives continuously, while information with the same cumulative returns arriving in discrete amounts is quickly absorbed into price. This finding holds across many different types of economic linkages, including shared-analyst-coverage

Understanding power prices dynamics is crucial for valuing flexibility assets such as storage or flexible consumption facilities that accommodate fluctuations in power supply from variable renewables. Owners of such assets need to know how extreme power prices can become in order to optimally manage (dis)charging or adjusting consumption volumes. We examine how to predict those high and low prices

The paper introduces an innovative three-step approach to simultaneously investigate the price dispersion in retail electricity and natural gas markets for both domestic and industrial consumers over time and across EU countries. In the first step, a multilateral Country-Product-Dummy price index is applied to estimate the purchasing power parity (PPP) of the EU energy market. In the second step, the

Literature indicates a decline in the market value of wind power with increasing market penetration. Two promising measures to mitigate this market value drop are system-friendly turbines and geographic diversification. This study analyzes the combined potential of these two measures, introduced in this paper as the hybrid approach, to simultaneously improve market values, reduce system costs and the

This paper provides empirical evidence using a difference-in-difference estimation strategy for the post-merger price effect caused by the acquisition of two branded chains for gasoline retail. On the one hand, mark-ups of the Hungarian retail gasoline market increased significantly after the takeover contract came into force. On the other hand, an additional price increase occurred after all of the

This research examines the effect of terrorism on green technological innovation in renewable energy technologies with a panel of 87 economies between 1991 and 2017. We find that economies respond with less green innovation in renewable energy technologies when experiencing severe terrorist attacks, especially in OECD countries. Among them, wind energy green innovation witnesses the greatest collapse

This study tests the effects of oil shocks on the returns of the European Union's carbon emission allowance (EUA) under different market conditions by using a quantile regression method. Furthermore, the research looks into whether the link between oil shocks and the returns of the EUA has any asymmetry or lagged effects. The results show that oil supply and demand shocks have a positive effect on

In this paper, we provide a real options model framing prosumers’ investment in photovoltaic plants. This is presented in a Smart Grid context where the exchange of energy among prosumers is possible. We determine the optimal size of the photovoltaic installations based on the influence the self-consumption profiles on the exchange of energy among prosumers. We calibrate the model using figures relative

Motivated by existing evidence of the salience theory (ST) effect in the United States, we investigate its importance in 49 countries over the past three decades. Initial results suggest a negative relationship between the ST measure and future returns. The underperformance of low ST stocks is the strongest in countries with high idiosyncratic risk. However, the salience effect has three vital limitations

Many countries have taken on ambitious but potentially costly renewable energy development goals to combat climate change. The government of Guatemala has introduced a plan to increase renewable generation capacity, while an estimated 76% of Guatemalans are energy poor. In this paper, we evaluate the trade-offs between alleviating energy poverty and achieving renewable energy goals in Guatemala. We

Abstract The emergence of digital technologies has significantly reduced the economic costs of data—search, storage, computation, transmission—and enabled new economic activities. Over the years, firms able to create a platform-based ecosystem have become a force of “creative construction.” Economic activities (C2C, B2C, B2B) have been reorganized around platform-based ecosystems for value creation

Revaluations of industry peers around horizontal acquisitions are negative when targets are private, but positive when they are public. We posit this “revaluation spread” arises because acquiring managers favor private targets when public firms are overvalued. Targets’ ownership status thus conveys information about industry assets’ misvaluation and triggers predictable revaluations. Supporting this

Estimated learning rates for onshore wind span a large range of about 40 percentage points. We propose a multi-factor experience curve model with a new economies of scale measure and estimate learning rates for onshore wind using country-level data from seven European countries. We find learning by doing rates of 2%–3% and learning by searching rates of 7%–9% in terms of LCOE. When decomposing LCOE

Abstract High-growth enterprises (HGEs) have a large economic impact but are notoriously hard to predict. Previous research has linked high-growth episodes to the configuration of lumpy indivisible resources inside firms, such that high capacity utilisation levels might stimulate future growth. We theorize that firms reaching critically high capacity utilisation levels reach a “trigger point” involving

The role of non-financial sector market fluctuations such as the role of oil price uncertainty either on financial stability or on policy-related economic uncertainty has not been investigated extensively. This study examines the connectedness of financial stress and economic policy uncertainty with a non-financial market of Brent oil and its prices, by employing a Diebold and Yilmaz (2012, 2014) generalized

Studies on the effects of information provision on residential energy use conclude that such information can promote households' energy-saving investments and conservation behavior. However, most of these studies are conducted in the U.S. or in other OECD countries, where households, on average, are richer and consume more electricity. This study evaluates the effect of descriptive information provision

This paper investigates whether media report favoritism affects firm crash risk both in the traditional and new energy sector. Crash risk is caused by a suddenly outflow of a large amount of cumulatively hidden bad news. Media report favoritism mitigates firm information asymmetry and impairs managements' ability to conceive bad news to outsiders. We find that media report favoritism, measured by total

We give a full analytic characterization of a large class of sticky-price models where the firm’s price-setting behavior is described by a generalized hazard function. Such a function allows for a vast variety of empirical hazards to be fitted. This setup is microfounded by random adjustment costs, as in Caballero and Engel (1999), or by information frictions, as in Woodford (2009). We establish two

We offer an axiomatization of risk models where the choices of the decision maker are correlation sensitive. By extending the techniques of conjoint measurement to the nondeterministic case, we show that transitivity is the von Neumann-Morgenstern axiom that has to be relaxed to allow for these richer patterns of behavior. To illustrate the advantages of our modeling choice, we provide a simple axiomatization

Carbon Capture and Storage (CCS) might be a central technology to reach the decarbonisation goals of the European energy system. However, CCS deployment faces multiple economic, technological, and infrastructure challenges. Related literature tends to only focus on certain aspects of the CCS technology or to be limited to a particular sector perspective. In contrast, this paper presents a holistic

We use facility-level panel data on CO2 emissions to investigate within-firm carbon leakage associated with Japanese regional emission trading systems (ETSs) at large-scale facilities in Tokyo and Saitama prefectures. A difference-in-difference analysis reveals that, relative to entities with no facility under ETSs, entities with regulated facilities have reduced emissions not only from these regulated

Transmission expansion is a complex problem in energy market design and research has not yet provided a market-based solution that is superior to a (partly) regulated approach. Furthermore, markets with a single market clearing price lack regional incentives for system friendly generation or transmission capacity expansion. In this paper, we propose a market design for transmission expansion that can

Brazilian energy-related GHG emissions have increased sharply in recent decades due to energy tax policies and weather changes. To understand the distributional effects and calculate the cost-effectiveness of these energy tax policies, we assess short-term GHG emissions and welfare impacts of poor and rich households in Brazil. To do this, we calculate the carbon footprint of 128 household products

Clean energy assets have opened up new investment opportunities for market participants. How to construct an efficient clean energy stock portfolio and how it would perform in comparison to traditional assets remain unclear. To fill this gap, this paper investigates optimal allocation within the clean energy stock market. Specifically, the risk and return characteristics of individual clean energy