Sentiments and risks: a spillover tale under climate policy uncertainty
Sentiments and risks: a spillover tale under climate policy uncertainty
The investor psyche that finds expression in sentiments has been centralized given its crucial spillovers with risk perceptions, eliciting clear interpretation of the spillover impact and its dynamics under the ongoing climate vulnerability. This paper analyzes the time-varying industrial spillover between sentiments and risks, and its asymmetric evolutions when facing climate policy uncertainty (CPU). Our results, drawn based on a historical dataset in the U.S., show that the risk of technology sector and the sentiment of financial sector are the two largest information providers. Sectors related to the real economy are found to be the greatest information receivers. Moreover, sectoral spillovers are less affected by CPU in normal market conditions but are influenced with a larger magnitude during extreme periods. Dirty and clean sectors exhibit similar roles in forming the spillover, while their roles show distinct responses when facing shocks to CPU. Our findings for the dynamic spillovers of sentiments and risks should be of interest to various stakeholders toward financial stability and green transition.
Climate policy uncertainty, Industrial spillovers, Risks, Sentiments
Huang, Yingying
1369f662-8cd0-4c6b-8bc4-eb25a0fa4fb3
Liang, Weizhong
c37d92c1-78e6-4d1c-bca7-52f60c746bc2
Duan, Kun
09eaaadf-6d46-406b-9b51-11edc63bea49
Parhi, Mamata
5e489f1d-9fe0-44b3-8027-bfa3ec6bfbd4
Mishra, Tapas
218ef618-6b3e-471b-a686-15460da145e0
7 January 2026
Huang, Yingying
1369f662-8cd0-4c6b-8bc4-eb25a0fa4fb3
Liang, Weizhong
c37d92c1-78e6-4d1c-bca7-52f60c746bc2
Duan, Kun
09eaaadf-6d46-406b-9b51-11edc63bea49
Parhi, Mamata
5e489f1d-9fe0-44b3-8027-bfa3ec6bfbd4
Mishra, Tapas
218ef618-6b3e-471b-a686-15460da145e0
Huang, Yingying, Liang, Weizhong, Duan, Kun, Parhi, Mamata and Mishra, Tapas
(2026)
Sentiments and risks: a spillover tale under climate policy uncertainty.
Energy Economics, 154 (109101), [109101].
(doi:10.1016/j.eneco.2025.109101).
Abstract
The investor psyche that finds expression in sentiments has been centralized given its crucial spillovers with risk perceptions, eliciting clear interpretation of the spillover impact and its dynamics under the ongoing climate vulnerability. This paper analyzes the time-varying industrial spillover between sentiments and risks, and its asymmetric evolutions when facing climate policy uncertainty (CPU). Our results, drawn based on a historical dataset in the U.S., show that the risk of technology sector and the sentiment of financial sector are the two largest information providers. Sectors related to the real economy are found to be the greatest information receivers. Moreover, sectoral spillovers are less affected by CPU in normal market conditions but are influenced with a larger magnitude during extreme periods. Dirty and clean sectors exhibit similar roles in forming the spillover, while their roles show distinct responses when facing shocks to CPU. Our findings for the dynamic spillovers of sentiments and risks should be of interest to various stakeholders toward financial stability and green transition.
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Sentiment and Risk_EneecoVF
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Accepted/In Press date: 16 December 2025
e-pub ahead of print date: 17 December 2025
Published date: 7 January 2026
Keywords:
Climate policy uncertainty, Industrial spillovers, Risks, Sentiments
Identifiers
Local EPrints ID: 509884
URI: http://eprints.soton.ac.uk/id/eprint/509884
ISSN: 0140-9883
PURE UUID: 553199ee-f557-435a-a4e8-6cee9a4c7467
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Date deposited: 10 Mar 2026 17:38
Last modified: 11 Mar 2026 02:47
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Contributors
Author:
Yingying Huang
Author:
Weizhong Liang
Author:
Kun Duan
Author:
Mamata Parhi
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