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Climate change has become a major macroeconomic challenge with profound implications for the real economy. This study examines the influence of perceived climate-related risks, proxied by news-based indices capturing media attention to global warming, natural disasters, US climate policy, and international climate summits, on US business activity across short- and long-term horizons. The methodological framework first employs principal component analysis to condense multiple explanatory variables into a single composite factor. A Fourier autoregressive distributed lag model is then adopted to estimate the effects of these forward-looking informational proxies over time. The results reveal marked heterogeneity across perceived climate-related risks and temporal horizons. Global warming news intensity constitutes a persistent impediment, exerting stronger and more durable effects on business activity. Natural disaster media coverage generates sharp short-term deterioration, although its influence fades over longer horizons. News-based transition-risk proxies exhibit a mixed pattern. US climate policy media coverage consistently dampens business conditions, whereas international climate summit coverage plays a comparatively modest role. Our findings underscore that a one-size-fits-all strategy is ineffective. Climate risk management should differentiate between persistent and transitory forces, recognizing that perceived risks may operate through expectations, uncertainty, and sentiment rather than realized damages or enacted policies alone.
Ahmed et al. (Fri,) studied this question.