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Cover IMF Working Papers
Building Back Better: How Big Are Green Spending Multipliers?
Nicoletta Batini, Mario di Serio, Matteo Fragetta, and Mr. Giovanni Melina
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