| ID | 150342 |
| Title Proper | Influences from the European Parliament on EU emissions prices |
| Language | ENG |
| Author | Peter Deeney, Mark Cummins, Michael Dowling, Alan F. Smeaton ; Deeney, Peter ; Smeaton, Alan F ; Dowling, Michael ; Cummins, Mark |
| Summary / Abstract (Note) | allowance (EUA) prices and volatility. Reductions in price and increases in volatility are observed when EP decisions are (i) not “party-political” in origin, (ii) made during times of low market sentiment, or (iii) made during times of low market attention. Daily EUA prices from 2007 to 2014 are used in the study, with decisions analysed using an event study approach for price impact, and a GARCH specification for volatility impact. Our findings suggest the need for policymakers to improve communication of long-term strategies for the EUA market. This aims to reduce the evident ongoing uncertainty experienced by traders around each decision made by the EP. The finding that sentiment and market attention at the time of an EP decision influences the market's reaction indicates a need to consider market dynamics in terms of decision timing, so that market turbulence is not an unintended by-product of an EP decision. Some form of medium term forward guidance may be called for. |
| `In' analytical Note | Energy Policy Vol. 88, No.88; Jan 2016: p.561–572 |
| Journal Source | Energy Policy 2016-01 88, 88 |
| Key Words | European Parliament ; Media Exposure ; EU Emission Allowances ; Market Sentiment |