The impact of green public finance and green taxes on environmental and non-environmental innovation

Mahmoud Hassan, Ji-Yong Lee, Luc Rouge and Marc Kouzez

Research in International Business and Finance, 2025, vol. 76, issue C

Abstract: This article investigates the impact of green public finance and green taxes on total, environmental, and non-environmental innovation in developed economies from 1994 to 2019. The findings reveal that in the short run, these variables do not significantly influence any of the three types of innovation. However, over the long run, green taxes are found to enhance both environmental and non-environmental innovation, whereas green public finance only promotes environmental innovation. Additionally, the Granger non-causality test indicates that past values of green taxes can predict future values across all three categories of innovation. The policy implications of this research are significant: increasing allocations toward green public finance and implementing green taxes can accelerate the development of various technologies, thereby contributing to the achievement of carbon neutrality in developed economies. Nonetheless, policymakers should justify the adoption of these measures by focusing on their positive long-term impacts on innovation.

Keywords: Green Public Finance; Green Taxes; Environmental Innovation; Non-environmental Innovation; Pooled Mean Group; Fully Modified Ordinary Least Squares method; Granger non-causality test (search for similar items in EconPapers)
Date: 2025
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Working Paper: The impact of green public finance and green taxes on environmental and non-environmental innovation (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:76:y:2025:i:c:s0275531925001242

DOI: 10.1016/j.ribaf.2025.102868

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