Pablo Burriel, M. Delgado-Téllez, Camila Figueroa, Iván Kataryniuk, Javier J. Pérez
This paper proposes a novel approach to estimating the contribution of macroeconomic factors to sovereign spreads in the euro area, defined as the spread level consistent with the country’s prevailing macroeconomic conditions. Despite the wealth of papers estimating sovereign spreads, model-dependency and lack of robustness remain key considerations. Accordingly, we propose a “thick modeling” empirical framework, based on the estimation of a wide range of models. We focus on 10-year sovereign bond yields for nine euro area countries, using a sample that covers the period January 2000 to December 2023. Our results show that observed spreads behave in line with macro-financial determinants in “normal” times. Macroeconomic determinants are also able to account for a significant fraction of the observed sovereign spread dynamics in most episodes of financial turbulence, such as the pandemic and the aftermath of the Russian invasion of Ukraine. However, we find evidence of some deviations of sovereign spreads from their estimated values during the 2010-2012 euro area sovereign debt crisis. In this period, macroeconomic indicators are able to explain at most 26% of the observed peaks in spreads among non-core countries.
{"title":"Estimating the contribution of macroeconomic factors to sovereign bond spreads in the euro area","authors":"Pablo Burriel, M. Delgado-Téllez, Camila Figueroa, Iván Kataryniuk, Javier J. Pérez","doi":"10.53479/36257","DOIUrl":"https://doi.org/10.53479/36257","url":null,"abstract":"This paper proposes a novel approach to estimating the contribution of macroeconomic factors to sovereign spreads in the euro area, defined as the spread level consistent with the country’s prevailing macroeconomic conditions. Despite the wealth of papers estimating sovereign spreads, model-dependency and lack of robustness remain key considerations. Accordingly, we propose a “thick modeling” empirical framework, based on the estimation of a wide range of models. We focus on 10-year sovereign bond yields for nine euro area countries, using a sample that covers the period January 2000 to December 2023. Our results show that observed spreads behave in line with macro-financial determinants in “normal” times. Macroeconomic determinants are also able to account for a significant fraction of the observed sovereign spread dynamics in most episodes of financial turbulence, such as the pandemic and the aftermath of the Russian invasion of Ukraine. However, we find evidence of some deviations of sovereign spreads from their estimated values during the 2010-2012 euro area sovereign debt crisis. In this period, macroeconomic indicators are able to explain at most 26% of the observed peaks in spreads among non-core countries.","PeriodicalId":296461,"journal":{"name":"Documentos de Trabajo","volume":" 9","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140218019","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Laura Álvarez-Román, Sergio Mayordomo, Carles Vergara-Alert, Xavier Vives
We study a model of the impact of climate risk on credit supply and test its predictions using data on all wildfires and corporate loans in Spain. Our findings reveal a significant decrease in credit following climate-driven events. This result is driven by outsider banks (large and diversified), which reduce lending significantly to firms in affected areas. By contrast, due to their access to soft information, local banks (geographically concentrated) reduce their loans to opaque affected firms to a lesser extent without increasing their risk. We also find that employment decreases in affected areas where local banks are not present.
{"title":"Climate risk, soft information and credit supply","authors":"Laura Álvarez-Román, Sergio Mayordomo, Carles Vergara-Alert, Xavier Vives","doi":"10.53479/36112","DOIUrl":"https://doi.org/10.53479/36112","url":null,"abstract":"We study a model of the impact of climate risk on credit supply and test its predictions using data on all wildfires and corporate loans in Spain. Our findings reveal a significant decrease in credit following climate-driven events. This result is driven by outsider banks (large and diversified), which reduce lending significantly to firms in affected areas. By contrast, due to their access to soft information, local banks (geographically concentrated) reduce their loans to opaque affected firms to a lesser extent without increasing their risk. We also find that employment decreases in affected areas where local banks are not present.","PeriodicalId":296461,"journal":{"name":"Documentos de Trabajo","volume":"157 2","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140428713","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Clodomiro Ferreira, José Miguel Leiva, Galo Nũno, Álvaro Ortiz, Tomasa Rodrigo, Sirenia Vazquez
We identify and study analytically three key channels that shape how inflation affects wealth inequality: (i) the traditional wealth (or Fisher) channel through which inflation redistributes from lenders to borrowers; (ii) an income channel through which inflation reduces the real value of sticky wages and benefits; and (iii) a relative consumption channel through which heterogeneous increases in the prices of different goods affect people differently depending on their consumption baskets. We then quantify these channels during the 2021 inflation surge in Spain using detailed, high-frequency customer-level data from one of the main commercial banks. The unexpected nature of the inflation shock and its perception as temporary in this period in particular closely fit the assumptions behind our theoretical decomposition. Results show that the wealth and income channels are an order of magnitude larger than the consumption channel. Middle-aged individuals were, in net terms, largely unaffected by inflation, while the elderly suffered the most. We find similar results when using representative surveys on households’ wealth, income, and consumption.
{"title":"The heterogeneous impact of inflation on households’ balance sheets.","authors":"Clodomiro Ferreira, José Miguel Leiva, Galo Nũno, Álvaro Ortiz, Tomasa Rodrigo, Sirenia Vazquez","doi":"10.53479/35932","DOIUrl":"https://doi.org/10.53479/35932","url":null,"abstract":"We identify and study analytically three key channels that shape how inflation affects wealth inequality: (i) the traditional wealth (or Fisher) channel through which inflation redistributes from lenders to borrowers; (ii) an income channel through which inflation reduces the real value of sticky wages and benefits; and (iii) a relative consumption channel through which heterogeneous increases in the prices of different goods affect people differently depending on their consumption baskets. We then quantify these channels during the 2021 inflation surge in Spain using detailed, high-frequency customer-level data from one of the main commercial banks. The unexpected nature of the inflation shock and its perception as temporary in this period in particular closely fit the assumptions behind our theoretical decomposition. Results show that the wealth and income channels are an order of magnitude larger than the consumption channel. Middle-aged individuals were, in net terms, largely unaffected by inflation, while the elderly suffered the most. We find similar results when using representative surveys on households’ wealth, income, and consumption.","PeriodicalId":296461,"journal":{"name":"Documentos de Trabajo","volume":"51 38","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139594537","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The achievement of an environmentally sustainable growth model, the development of renewable energies or the adoption of energy efficiency measures are nowadays fundamental issues in economic analysis and are a substantial part of the public debate. However, while there may be an increased social awareness of these issues, a different question is at what pace these social concerns have been translated into regulation, fostering or hindering the development of new markets or “green” technologies. This paper proposes a rigorous empirical study identifying and quantifying, through text analysis, all regulations related to four different subject blocks associated with “green growth” (renewable energies, sustainable transportation, pollution and energy efficiency), issued by Spanish national or regional governments over the period 2000-2022. This research thus constructs a database in panel data format. Among other results, we identify 3,482 regulations related to renewable energies, 783 regulations dealing with sustainable transportation, 108 on pollution management and 5,116 related to the measurement (and management) of energy efficiency. The results show that regulation is diverse by subject matter, reflects significant regional diversity and has increased over time, especially in more recent years, after a certain standstill during the Great Recession. This database could help develop future research projects on the impacts of “green” regulation on certain economic or institutional variables (such as “green” innovation or environmental conflict). The paper concludes with a comparison of renewable energy regulation in France and Spain, also based on text analysis. Spain shows a higher and more disaggregated volume of regulation.
{"title":"“Green regulation”: a quantification of regulations related to renewable energy, sustainable transport, pollution and energy efficiency between 2000 and 2022","authors":"Juan S. Mora-Sanguinetti, Andrés Atienza-Maeso","doi":"10.53479/35594","DOIUrl":"https://doi.org/10.53479/35594","url":null,"abstract":"The achievement of an environmentally sustainable growth model, the development of renewable energies or the adoption of energy efficiency measures are nowadays fundamental issues in economic analysis and are a substantial part of the public debate. However, while there may be an increased social awareness of these issues, a different question is at what pace these social concerns have been translated into regulation, fostering or hindering the development of new markets or “green” technologies. \u0000 This paper proposes a rigorous empirical study identifying and quantifying, through text analysis, all regulations related to four different subject blocks associated with “green growth” (renewable energies, sustainable transportation, pollution and energy efficiency), issued by Spanish national or regional governments over the period 2000-2022. This research thus constructs a database in panel data format. Among other results, we identify 3,482 regulations related to renewable energies, 783 regulations dealing with sustainable transportation, 108 on pollution management and 5,116 related to the measurement (and management) of energy efficiency. \u0000 The results show that regulation is diverse by subject matter, reflects significant regional diversity and has increased over time, especially in more recent years, after a certain standstill during the Great Recession. This database could help develop future research projects on the impacts of “green” regulation on certain economic or institutional variables (such as “green” innovation or environmental conflict). \u0000 The paper concludes with a comparison of renewable energy regulation in France and Spain, also based on text analysis. Spain shows a higher and more disaggregated volume of regulation.","PeriodicalId":296461,"journal":{"name":"Documentos de Trabajo","volume":"45 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138972559","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ricardo Barahona, Stefano Cassella, Kristy A. E. Jansen
We investigate how teams impact return extrapolation, a bias in belief formation which is pervasive at the individual level and crucial to behavioral asset-pricing models. Using a sample of US equity money managers and a within-subject design, we find that teams attenuate their own members’ extrapolation bias by 75%. This reduction is not due to learning or differences in compensation, workload, or investment objectives between solo-managed and team-managed funds. Rather, we provide supportive evidence that team members engaging in deeper cognitive reflection can explain the bias reduction.
{"title":"Do Teams Alleviate or Exacerbate the Extrapolation Bias in the Stock Market?","authors":"Ricardo Barahona, Stefano Cassella, Kristy A. E. Jansen","doi":"10.53479/35522","DOIUrl":"https://doi.org/10.53479/35522","url":null,"abstract":"We investigate how teams impact return extrapolation, a bias in belief formation which is pervasive at the individual level and crucial to behavioral asset-pricing models. Using a sample of US equity money managers and a within-subject design, we find that teams attenuate their own members’ extrapolation bias by 75%. This reduction is not due to learning or differences in compensation, workload, or investment objectives between solo-managed and team-managed funds. Rather, we provide supportive evidence that team members engaging in deeper cognitive reflection can explain the bias reduction.","PeriodicalId":296461,"journal":{"name":"Documentos de Trabajo","volume":"452 ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139203188","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Juan S. Mora-Sanguinetti, Laura Hospido, Andrés Atienza-Maeso
Public policies that aim to achieve gender equality, improve work-life balance or combat harassment may have economic consequences, for example, through changes in the labour supply of women or other groups. Although there may be an increase in social awareness of these problems, a separate question is whether this increase is reflected in specific legislation in a society. The objective of this paper is to quantify for the first time when, where and at what rate these social concerns have been translated into legislation. The study covers the period 1996-2022, identifying both central government legislation and legislation in each of the autonomous regions. The analysis, therefore, organises the information in a panel format. The indicators reveal the high degree of heterogeneity in terms of the legislation in the various related areas, with non-discrimination legislation being the most developed and frequent. They also reveal the differences between autonomous regions, with Andalusia and Catalonia being those in which most legislation has been introduced. As an example of an application of this analysis, the database is then used to investigate the relationship between legislative changes and labour market inflows for women. Our estimates show a positive relationship between the volume of legislation passed in the areas of interest, such as non-discrimination policies, and indicators of both employment and female labour force participation.
{"title":"The numbers of equality regulation. Quantifying regulatory activity on non-discrimination and its relationship with gender gaps in the labour market","authors":"Juan S. Mora-Sanguinetti, Laura Hospido, Andrés Atienza-Maeso","doi":"10.53479/34754","DOIUrl":"https://doi.org/10.53479/34754","url":null,"abstract":"Public policies that aim to achieve gender equality, improve work-life balance or combat harassment may have economic consequences, for example, through changes in the labour supply of women or other groups. Although there may be an increase in social awareness of these problems, a separate question is whether this increase is reflected in specific legislation in a society. The objective of this paper is to quantify for the first time when, where and at what rate these social concerns have been translated into legislation. The study covers the period 1996-2022, identifying both central government legislation and legislation in each of the autonomous regions. The analysis, therefore, organises the information in a panel format. The indicators reveal the high degree of heterogeneity in terms of the legislation in the various related areas, with non-discrimination legislation being the most developed and frequent. They also reveal the differences between autonomous regions, with Andalusia and Catalonia being those in which most legislation has been introduced. As an example of an application of this analysis, the database is then used to investigate the relationship between legislative changes and labour market inflows for women. Our estimates show a positive relationship between the volume of legislation passed in the areas of interest, such as non-discrimination policies, and indicators of both employment and female labour force participation.","PeriodicalId":296461,"journal":{"name":"Documentos de Trabajo","volume":"10 2","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-11-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139271353","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We measure the reaction of search for income in mutual funds to supervisory-induced dividend restrictions on euro area banks during the COVID-19 pandemic, which operated as an exogenous shock to payouts in this sector. Using granular data on euro area-based mutual funds’ holdings, we show that demand for dividends motivated portfolio decisions in this period and that these decisions had implications for stock returns. Specifically, we document that there were more sales of bank stocks by income-oriented funds after payout restrictions were set in place. These funds were however less inclined to dispose of bank CoCos, an alternative high income-generating asset issued by credit institutions and not subject to supervisory distribution limits. Lastly, we analyze the price impact of these portfolio adjustments, documenting negative abnormal returns in bank stocks more exposed to income-oriented funds after the policy announcement. Our research evidences that search for income is relevant in asset allocation decisions and price formation, and quantifies some of the side effects of dividend restriction policies.
{"title":"Dividend Restrictions and Search for Income","authors":"Esther Cáceres, Matías Lamas","doi":"10.53479/34644","DOIUrl":"https://doi.org/10.53479/34644","url":null,"abstract":"We measure the reaction of search for income in mutual funds to supervisory-induced dividend restrictions on euro area banks during the COVID-19 pandemic, which operated as an exogenous shock to payouts in this sector. Using granular data on euro area-based mutual funds’ holdings, we show that demand for dividends motivated portfolio decisions in this period and that these decisions had implications for stock returns. Specifically, we document that there were more sales of bank stocks by income-oriented funds after payout restrictions were set in place. These funds were however less inclined to dispose of bank CoCos, an alternative high income-generating asset issued by credit institutions and not subject to supervisory distribution limits. Lastly, we analyze the price impact of these portfolio adjustments, documenting negative abnormal returns in bank stocks more exposed to income-oriented funds after the policy announcement. Our research evidences that search for income is relevant in asset allocation decisions and price formation, and quantifies some of the side effects of dividend restriction policies.","PeriodicalId":296461,"journal":{"name":"Documentos de Trabajo","volume":"53 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139313196","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the globalization of trade in Latin America and Asia over the past 25 years and quantify its economic impact. Employing structural gravity models, we first estimate a proxy of trade globalization that captures the ease of trading internationally with respect to trading domestically. The results indicate similar trade globalization patterns in the two regions, albeit with a high degree of heterogeneity within them. Trade globalization has been particularly strong in agriculture, mining and manufacturing, but has lagged in services. Within-region heterogeneity is associated with a set of trade policy instruments, including tariffs, non-tariff measures, WTO membership and trade agreements. Next, we quantify the economic implications of the estimated globalization trends. Simulations of a multi-sector trade model point to heterogeneous long-term impacts of globalization on GDP (some countries exhibiting substantial gains and others experiencing large losses), with no single sector playing a predominant role.
{"title":"How far has globalization gone? A tale of two regions","authors":"Rodolfo Campos, Samuel Pienknagura, Jacopo Timini","doi":"10.53479/34612","DOIUrl":"https://doi.org/10.53479/34612","url":null,"abstract":"We study the globalization of trade in Latin America and Asia over the past 25 years and quantify its economic impact. Employing structural gravity models, we first estimate a proxy of trade globalization that captures the ease of trading internationally with respect to trading domestically. The results indicate similar trade globalization patterns in the two regions, albeit with a high degree of heterogeneity within them. Trade globalization has been particularly strong in agriculture, mining and manufacturing, but has lagged in services. Within-region heterogeneity is associated with a set of trade policy instruments, including tariffs, non-tariff measures, WTO membership and trade agreements. Next, we quantify the economic implications of the estimated globalization trends. Simulations of a multi-sector trade model point to heterogeneous long-term impacts of globalization on GDP (some countries exhibiting substantial gains and others experiencing large losses), with no single sector playing a predominant role.","PeriodicalId":296461,"journal":{"name":"Documentos de Trabajo","volume":"57 1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-10-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139316440","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Errors in the collection of household finance survey data may proliferate in population estimates, especially when there is oversampling of some population groups. Manual case-by-case revision has been commonly applied in order to identify and correct potential errors and omissions such as omitted or misreported assets, income and debts. We derive a machine learning approach for the purpose of classifying survey data affected by severe errors and omissions in the revision phase. Using data from the Spanish Survey of Household Finances we provide the best-performing supervised classification algorithm for the task of prioritizing cases with substantial errors and omissions. Our results show that a Gradient Boosting Trees classifier outperforms several competing classifiers. We also provide a framework that takes into account the trade-off between precision and recall in the survey agency in order to select the optimal classification threshold.
{"title":"A Score Function to Prioritize Editing in Household Survey Data: A Machine Learning Approach","authors":"Nicolás Forteza, Sandra García-Uribe","doi":"10.53479/34613","DOIUrl":"https://doi.org/10.53479/34613","url":null,"abstract":"Errors in the collection of household finance survey data may proliferate in population estimates, especially when there is oversampling of some population groups. Manual case-by-case revision has been commonly applied in order to identify and correct potential errors and omissions such as omitted or misreported assets, income and debts. We derive a machine learning approach for the purpose of classifying survey data affected by severe errors and omissions in the revision phase. Using data from the Spanish Survey of Household Finances we provide the best-performing supervised classification algorithm for the task of prioritizing cases with substantial errors and omissions. Our results show that a Gradient Boosting Trees classifier outperforms several competing classifiers. We also provide a framework that takes into account the trade-off between precision and recall in the survey agency in order to select the optimal classification threshold.","PeriodicalId":296461,"journal":{"name":"Documentos de Trabajo","volume":"20 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139316969","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using the dynamic, three-region environmental multi-sector general equilibrium model EMuSe, we find that pricing carbon in Germany or Spain only leads to a permanent negative effect on output in these economies. The induced emissions reduction is not large enough to overcompensate for the increase in marginal production costs. If the rest of Europe joins the carbon pricing scheme, long-run output effects are positive. However, in this case, transition costs are even larger due to close trade relations within Europe. We find evidence for carbon leakage, which can be reduced slightly by a border adjustment mechanism. Still, it is no game changer as it mainly protects dirty domestic sectors. While Germany benefits from border adjustment, Spain actually loses throughout the transition. In the long run, the Spanish energy sector benefits most because of its relatively low emission intensity. Finally, Europe has a strong incentive to get the rest of the world on board as then the downturn is shorter and long-run benefits are larger.
{"title":"Effects of Carbon Pricing in Germany and Spain: An Assessment with EMuSe","authors":"Natascha Hinterlang","doi":"10.53479/33814","DOIUrl":"https://doi.org/10.53479/33814","url":null,"abstract":"Using the dynamic, three-region environmental multi-sector general equilibrium model EMuSe, we find that pricing carbon in Germany or Spain only leads to a permanent negative effect on output in these economies. The induced emissions reduction is not large enough to overcompensate for the increase in marginal production costs. If the rest of Europe joins the carbon pricing scheme, long-run output effects are positive. However, in this case, transition costs are even larger due to close trade relations within Europe. We find evidence for carbon leakage, which can be reduced slightly by a border adjustment mechanism. Still, it is no game changer as it mainly protects dirty domestic sectors. While Germany benefits from border adjustment, Spain actually loses throughout the transition. In the long run, the Spanish energy sector benefits most because of its relatively low emission intensity. Finally, Europe has a strong incentive to get the rest of the world on board as then the downturn is shorter and long-run benefits are larger.","PeriodicalId":296461,"journal":{"name":"Documentos de Trabajo","volume":"82 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139334060","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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