World ESG Performance and Economic Activity
50 Pages Posted: 31 May 2023 Last revised: 29 Nov 2023
Date Written: November 23, 2023
Abstract
Using data from forty-six developed and emerging markets, we show that a world-based environmental, social, and governance index (ESGI) provides useful information about future economic activity in- and out-of-sample. A relatively high increase in ESGI predicts a decrease (increase) in future economic activity in the short (long) term. We document that the environmental, social, and governance components of ESGI contribute to the predictability of economic activity. Our results have significant implications for policymakers to advise firms to adopt better ESG practices.
Keywords: Forecasting; Real Economic Activity; ESG
JEL Classification: G15; E37
Suggested Citation: Suggested Citation