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Building Back Better: How Big Are Green Spending Multipliers?
Author: Nicoletta Batini, Mario di Serio, Matteo Fragetta, and Mr. Giovanni Melina
Series:
IMF Working Papers
Volume/Issue:
Volume 2021: Issue 087
Language:
English
Publication Date:
19 Mar 2021
DOI:
https://doi.org/10.5089/9781513574462.001
ISBN:
9781513574462
ISSN:
1018-5941
Pages:
47
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
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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 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.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund