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Global climate policy uncertainty and carbon market volatility: Aggravating or mitigating across market conditions?

Author

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  • Xiao, Jihong
  • Wang, Yudong
  • Wen, Danyan

Abstract

Using quantile regression, this paper finds that lagged changes in global climate policy uncertainty (GCPU) reduce carbon market volatility during market turmoil. This mitigating effect surpasses that of the US CPU and is amplified by financial market fear.

Suggested Citation

  • Xiao, Jihong & Wang, Yudong & Wen, Danyan, 2025. "Global climate policy uncertainty and carbon market volatility: Aggravating or mitigating across market conditions?," Economics Letters, Elsevier, vol. 254(C).
    • Handle: RePEc:eee:ecolet:v:254:y:2025:i:c:s0165176525002782
    DOI: 10.1016/j.econlet.2025.112441
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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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