Friedrich, Marina; Fries, Sébastien; Pahle, Michael; … - 2021
regulatory instability (Kydland and Prescott, 1977). In this work, we provide evidence for this claim from the EU’s cap …-and-trade program (EU-ETS). We ground our analysis in the theoretical finance literature, and apply a mixed method approach (time …-varying regression, bubble detection, crash-odds modelling). We find that the recent EU-ETS reform triggered market participants into …