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Building Back Better: How Big Are Green Spending Multipliers?

Nicoletta Batini (), Giovanni Melina, Mario di Serio and Matteo Fragetta ()

No 2021/087, IMF Working Papers from International Monetary Fund

Abstract: This paper provides estimates of output multipliers for spending in clean energy and biodiversity conservation, as well as for spending on non-ecofriendly energy and land use activities. Using a new international dataset, we find that every dollar spent on key carbon-neutral or carbon-sink activities can generate more than a dollar’s worth of economic activity. Although not all green and non-ecofriendly expenditures in the dataset are strictly comparable due to data limitations, estimated multipliers associated with spending on renewable and fossil fuel energy investment are comparable, and the former (1.1-1.5) are larger than the latter (0.5-0.6) with over 90 percent probability. These findings survive several robustness checks and lend support to bottom-up analyses arguing that stabilizing climate and reversing biodiversity loss are not at odds with continuing economic advances.

Keywords: green multiplier; green stimulus; clean energy; conservation spending; nuclear energy; biodiversity; nature-based solutions; agricultural subsidies; fossil fuels.; spending data; B. data coverage; eco-friendly spending; Policy implication; data coverage; Renewable energy; Renewable resources; Non-renewable resources; Environmental protection; Greenhouse gas emissions; Global; investments multiplier; spending multiplier; cumulated multiplier; land use multiplier; spending shock; robustness check; eco-friendly expenditure (search for similar items in EconPapers)
Pages: 47
Date: 2021-03-19
New Economics Papers: this item is included in nep-ene and nep-env
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Handle: RePEc:imf:imfwpa:2021/087