The future international climate policy architecture will most likely consist of partial climate policy initiatives like the EU's Emission Trading System. Trade integration threatens to undermine these systems' environmental effectiveness by shifting emissions to other countries. We estimate a...

Expectations matter for economic activity. To the extent that they are fundamentally unwarranted, they represent "undue optimism or pessimism" (Pigou, 1927). In this paper, we identify empirically the effect of undue optimism/pessism ("optimism shocks") on economic activity. In a first step, we...