Abstract:

This study investigates the impact of climate risks on economic activity in France. Using natural language processing methods on three major French newspapers (Le Monde, Les Echos, and Le Figaro) in 2000-2023, we construct a measure of climate risks that we disentangle into physical- and transition-risk components. Our findings highlight several transmission channels through which climate risks affect the economy: the business cycle channel, the precautionary savings channel, the inflation channel, and the banking/credit channel. Moreover, while we document the existence of heterogeneous responses to our measures of physical and transition risks, we find that the tone of media covering climate risks matters beyond the frequency of published articles. These results remain robust to newspapers' political slant and ruling parties' orientation, with sensitivity analyses confirming their validity. Climate risks' effects also depend on environmental policy stringency. Our findings show that the media plays a crucial role in influencing public beliefs about climate change related issues.

Location:

Room Malinvaud, CEPS University of Val d'Essonne
Boulevard François Mitterrand, 91025, Evry