Aniruddh Mohan, Akshay Thyagarajan, Nicholas Muller, 31 July 2020

The nexus of economic development and environmental impact is at the core of current policy debates. This is often captured by an ‘environmental Kuznets curve’, an inverted-U shaped relationship between income and pollution levels. This column argues that, in contrast to conventional approaches, sustainability analysis should focus on the monetary damages of pollution, rather than the physical tonnage of emissions. It highlights a large divergence in the Kuznets curves based on these two approaches. In addition, it proposes a measure of GDP growth which adjusts for monetary pollution damages.

Mathias Reynaert, 26 July 2020

In 2009, the EU adopted one of the world’s most demanding emission standards for its automobile market, requiring automakers to reduce emissions by 18%. This column discusses the different strategies firms can adopt to comply with these requirements and analyses their respective welfare effects. Using data from the Netherlands, it finds a growing divergence between on-road fuel consumption and laboratory results since the new policy, suggesting strategic ‘gaming’ by automakers. The political environment, the enforcement of the policy, and strategic decisions by firms are crucial to evaluating the welfare consequences of the emission standard. 

Alexandre Garel, Arthur Petit-Romec, 21 July 2020

The COVID-19 pandemic has brought uncertainty over the future of climate actions. This column studies the cross-section of stock returns during the COVID-19 shock to capture investors’ views and expectations about environmental issues. Firms with responsible strategies on environmental and climate issues are found to have had better stock returns between 20 February and 20 March 2020. Hence, the COVID-19 shock did not distract investors’ attention away from environmental issues but rather led investors to reward environmental responsibility to a larger extent.

Walker Hanlon, Casper Worm Hansen, Jake Kantor, 15 July 2020

Temperature can affect human health and mortality. Historical evidence on the changing relationship between temperature and mortality may be useful in today’s world as we consider adaptive strategies to face global warming. This column uses detailed weekly mortality data from London for 1866–1965 to examine how the temperature-mortality relationship changed as the city developed. In 1866–1914, high-temperature events increase mortality for several weeks, but much of the effect of high temperatures on mortality has disappeared after WWI. The change is linked to the significant reduction in infant digestive disease around 1900.

David Popp, Francesco Vona, Joëlle Noailly, 04 July 2020

Many governments worldwide are currently considering fiscal recovery packages to address the Covid-19 crisis. This column analyses the impact of past green fiscal stimulus on employment. Focusing on the American Recovery and Reinvestment Act after the Global Crisis, it finds that that the green stimulus was particularly effective in creating jobs in the long run, but not in the short run. Hence, while green stimulus packages are useful to reorient the economy and direct it onto a green trajectory in the longer run, they are less effective in restarting the economy quickly.

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