Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271523 
Year of Publication: 
2023
Series/Report no.: 
University of Tübingen Working Papers in Business and Economics No. 158
Publisher: 
University of Tübingen, Faculty of Economics and Social Sciences, Tübingen
Abstract: 
News drive expectations about the economy's future fundamentals. Climate change is big news: it will impact the economy profoundly but the effect will take some time to materialize in full. Climate-change expectations thus offer a unique opportunity to study the impact of news on the business cycle. We measure these expectations in a representative survey of US consumers. Respondents expect not much of an impact on GDP growth, but perceive a high probability of costly, rare disasters-suggesting they are salient of climate change. Furthermore, expectations vary systematically with socioeconomic characteristics, media consumption, various information treatments and over time. We calibrate a New Keynesian model with rare disasters to key results of the survey and find that shifts in climate change expectations operate like demand shocks and cause sizeable business cycle fluctuations.
Subjects: 
Climate change
Disasters
Expectations
Survey,Monetary policy
Business Cycle
Natural rate of interest
JEL: 
E43
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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