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Are Climate Change Policies Politically Costly?

Author

Listed:
  • Davide Furceri
  • Michael Ganslmeier
  • Mr. Jonathan David Ostry

Abstract

Are policies designed to avert climate change (Climate Change Policies, or CCPs) politically costly? Using data on governmental popular support and the OECD’s Environmental Stringency Index, we find that CCPs are not necessarily politically costly: policy design matters. First, only market-based CCPs (such as emission taxes) generate negative effects on popular support. Second, the effects are muted in countries where non-green (dirty) energy is a relatively small input into production. Third, political costs are not significant when CCPs are implemented during periods of low oil prices, generous social insurance and low inequality.

Suggested Citation

  • Davide Furceri & Michael Ganslmeier & Mr. Jonathan David Ostry, 2021. "Are Climate Change Policies Politically Costly?," IMF Working Papers 2021/156, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/156
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    Cited by:

    1. João Tovar Jalles, 2024. "Financial Crises and Climate Change," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(1), pages 166-190, March.
    2. Réka Juhász & Nathan Lane, 2024. "The Political Economy of Industrial Policy," CESifo Working Paper Series 11143, CESifo.
    3. Sommer, Stephan & Konc, Théo & Drews, Stefan, 2023. "How Resilient is Public Support for Carbon Pricing? Longitudinal Evidence from Germany," Ruhr Economic Papers 1017, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Brännlund, Anton & Peterson, Lauri, 2024. "Power politics: How electric grievances shape election outcomes," Ecological Economics, Elsevier, vol. 217(C).
    5. Deb, Pragyan & Furceri, Davide & Ostry, Jonathan D. & Tawk, Nour, 2023. "Creative destruction during crises: An opportunity for a cleaner energy mix," Energy Economics, Elsevier, vol. 128(C).
    6. Fabra, Natalia & Reguant, Mar, 2024. "The energy transition: A balancing act," Resource and Energy Economics, Elsevier, vol. 76(C).
    7. Stephan Sommer & Théo Konc & Stefan Drews, 2023. "How resilient is public support for carbon pricing? Longitudinal evidence from Germany," Berlin School of Economics Discussion Papers 0021, Berlin School of Economics.
    8. Muth, Daniel, 2023. "Pathways to stringent carbon pricing: Configurations of political economy conditions and revenue recycling strategies. A comparison of thirty national level policies," Ecological Economics, Elsevier, vol. 214(C).

    More about this item

    Keywords

    EPS change; policy design; Policy implication; popular support; baseline model; Climate change; Climate policy; Fuel prices; Environmental policy; Natural disasters; Global;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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