Financial Markets and Green Innovation

Philippe Aghion, Lena Boneva, Johannes Breckenfelder, Luc Laeven, Conny Olovsson, Alexander Popov and Elena Rancoita

No 2686, Working Paper Series from European Central Bank

Abstract: Fulfilling the commitments embedded in the Paris Agreement requires a climate-technologyrevolution. Patented innovation of low-carbon technologies is lower in the EU than in selectedpeers, and very heterogeneous across member states. We motivate this fact with anendogenous model of directed technical change with government policy and financialmarkets. Variations in carbon taxes, R&D investment, and venture capital investment explaina large share of the variation in green patents per capita in the data. We discuss implicationsfor policy, concluding that governments can play a catalytic role in stimulating greeninnovation while the role of central banks is limited. JEL Classification: E5, G1, O4, Q5

Keywords: central banks; climate change; directed technical change; financial markets; public policy (search for similar items in EconPapers)
Date: 2022-07
New Economics Papers: this item is included in nep-ene, nep-env, nep-fdg and nep-ino
Note: 1125999
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20222686

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