The Missing Government in Green Finance

Julian Lamprecht and Marcel Thum

FinanzArchiv: Public Finance Analysis, 2024, vol. 80, issue 3, 332-349

Abstract: The recent literature on green finance has extensively discussed the extent to which responsible investors can contribute to a greener economy, particularly regarding climate change. Somewhat surprisingly, governments as key players in climate policies are practically absent in this analysis. Using a simple model of private and public provision of a public good, we show that, even under favorable conditions, interaction with government policies renders private green investment ineffective and maybe even detrimental to making the economy truly greener. This result does not only hold for a benevolent, welfare-maximizing government but also in a political-economy setting with a medianvoter government.

Keywords: green finance; corporate social responsibility; climate change; private provision of public goods (search for similar items in EconPapers)
JEL-codes: G32 H41 Q54 Q58 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1628/fa-2024-0014

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