Climate Change-Stock Return Volatility Nexus in Advanced Economies : The Role of Technology Shocks

In this paper, we analyze the connection between climate change and stock return volatility. We use temperature anomalies to measure climate change and examine the role of technology shocks. Our study covers decades of data from 1880 to 2018, and we use a new dataset to track technology shocks. We find that the relationship between climate change and stock return volatility is episodic and varies with different degrees of intensity of high-temperature anomalies and technology shocks. Our results suggest that policy actions should include investing in climate technologies to reduce greenhouse gas emissions and encouraging investment in eco-friendly assets