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SUMMARY:Financial Frictions and Pollution Abatement Over the Life Cycle of
  Firms - Chi-Yang Tsou (University of Manchester)
DTSTART:20240530T120000Z
DTEND:20240530T130000Z
UID:TALK202348@talks.cam.ac.uk
CONTACT:Cerf Admin
DESCRIPTION:This paper examines how firms’ investments in pollution abat
 ement are influenced by financial frictions and policy uncertainty. Our da
 ta analyses suggest that financially constrained firms are less likely to 
 invest in pollution abatement and are more likely to release toxic polluta
 nts. Such a pattern is intensified by policy uncertainty measured by close
  gubernatorial elections or uncertainty revealed in firms’ earnings conf
 erence calls. We then develop a heterogeneous firm general equilibrium mod
 el\, in which financially constrained firms face increased marginal costs 
 of finance from pollution abatement. The marginal costs of finance are fur
 ther amplified by policy uncertainty in environmental regulation\, reducin
 g firms’ pollution prevention. The aggregate effect of environmental pol
 icy may therefore depend on the distribution of financial frictions and po
 licy uncertainty.\n\n
LOCATION:CJBS\, Room W2.01
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