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Who's Going Green and Why? Trends and Determinants of Green Investment
Author:
Luc Eyraud
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Ms. Changchang Zhangnull

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Mr. Abdoul A Wane
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Mr. Benedict J. Clements
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Series:
IMF Working Papers
Volume/Issue:
Volume 2011: Issue 296
Language:
English
Publication Date:
01 Dec 2011
DOI:
https://doi.org/10.5089/9781463927301.001
ISBN:
9781463927301
ISSN:
1018-5941
Pages:
39
Keywords:
WP; GI; cost; green energy
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper fills a gap in the macroeconomic literature on renewable sources of energy. It offers a definition of green investment and analyzes the trends and determinants of this investment over the last decade for 35 advanced and emerging countries. We use a new multi-country historical dataset and find that green investment has become a key driver of the energy sector and that its rapid growth is now mostly driven by China. Our econometric results suggest that green investment is boosted by economic growth, a sound financial system conducive to low interest rates, and high fuel prices. We also find that some policy interventions, such as the introduction of carbon pricing schemes, or "feed-in-tariffs," which require use of "green" energy, have a positive and significant impact on green investment. Other interventions, such as biofuel support, do not appear to be associated with higher green investment.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2011: Issue 296