The macroeconomic effects of climate policy uncertainty: Evidence from Portugal

Abstract

This study examines the macroeconomic impact of policy uncertainty in climate decision-making. It employs data mining to 23 Portuguese news sources to construct a novel monthly Climate Policy Uncertainty (CPU) series, which is then used in a Structural Vector Autoregression (SVAR) model to analyze its macroeconomic effects. These responses collectively reveal significant economic restructuring in response to climate policy uncertainty. The combination of reduced industrial production and increased unemployment suggests substantial supply-side adjustment costs during the transition. However, the positive stock market response indicates that financial markets view these changes as ultimately beneficial for certain sectors, particularly those aligned with environmental sustainability.