“Forecasting the Cost to Firms of Climate Policy using Prediction Markets and Lobbying Records” AbstractForecasting the cost of proposed policies may be difficult when prior experience is limited. This paper develops a novel forecasting method that combines prediction market prices with stock returns to estimate the expected cost to firms of the Waxman-Markey climate policy bill. I find Waxman-Markey would have reduced the value of listed firms by $150 billion with greater losses for carbon intensive sectors. A regression discontinuity design finds sectors entitled to free allowances under the bill experienced larger gains. Lobbying records are used to estimate a political influence function for listed firms and to partially identify costs for unlisted firms.Link to paperAbout the Speaker:Kyle Meng is an environmental economist whose research examines the costs, benefits, and political economy of climate policy with applications around the world. His research has been published in Nature and PNAS. Kyle is currently a Postdoctoral Fellow with joint appointment at the Woodrow Wilson School of Public and International Affairs at Princeton University and the Environmental Defense Fund. Beginning in the fall of 2014, Kyle will be an Assistant Professor of Environmental Science and Management and Economics at the University of California, Santa Barbara.