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Is Investor Anxiety Attributable to Carbon Emissions Trading and Inflation?

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  • Hung, Shih-Wei

Abstract

This study employs the generalized method of moments, two-stage least squares, and single time-series difference-in-differences approaches to investigate the relationship between carbon emissions trading, inflation, stock returns, and investor anxiety. The empirical analysis reveals a remarkably positive effect of carbon emissions returns on inflation. Moreover, inflation is positively correlated with investor anxiety and negatively associated with stock returns. These findings establish a link between carbon emissions trading, inflation, stock market performance, and investor sentiment. Reportedly, carbon emissions trading contributes to inflation, further heightening investor anxiety and lowering stock returns.

Suggested Citation

  • Hung, Shih-Wei, 2025. "Is Investor Anxiety Attributable to Carbon Emissions Trading and Inflation?," Finance Research Letters, Elsevier, vol. 85(PD).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pd:s1544612325014096
    DOI: 10.1016/j.frl.2025.108154
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