Price Exuberance in the Carbon Emissions Trading Market

5 Pages Posted: 5 Oct 2021

Date Written: June 1, 2021


The pricing of carbon is an essential element in addressing climate change through market activity. Price exuberance can potentially result in a loss of confidence in these markets. We test to see whether the time-series changes from a random walk to an explosive process during the first five months of the European Union’s Emission Trading System Phase IV. Our finding is that the market exhibits market exuberant behavior over this period.

Keywords: Climate change, Pricing, Government Policy, Carbon reduction, Emissions trading, Market Efficiency

JEL Classification: Q30, Q21, Q48

Suggested Citation

Karkkainen, Tatja and Broby, Daniel, Price Exuberance in the Carbon Emissions Trading Market (June 1, 2021). Available at SSRN: or

Daniel Broby

Ulster University ( email )

Accounting, Finance and Economics
Cathedral Quarter
Belfast, Northern Ireland BT15 1ED
United Kingdom

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