Building Back Better: How Big Are Green Spending Multipliers?

Author/Editor:

Nicoletta Batini ; Mario di Serio ; Matteo Fragetta ; Giovanni Melina ; Anthony Waldron

Publication Date:

March 19, 2021

Electronic Access:

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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.

Summary:

This paper estimates multipliers for spending in clean energy and biodiversity conservation to help inform stimulus measures for a post-COVID-19 sustainable recovery. Using a new international dataset, part of which was especially assembled for this analysis, we find that every dollar spent on key carbon-neutral or carbon-sink activities—from zero-emission power plants to the protection of wildlife and ecosystems—can generate more than a dollar’s worth of economic activity. The estimated multipliers associated with green spending are about 2 to 7 times larger than those associated with non-eco-friendly expenditure, depending on sectors, technologies and horizons. These findings survive several robustness checks and suggest that ‘building back better’ could be a win-win for economies and the planet.

Series:

Working Paper No. 2021/087

Subject:

Frequency:

regular

English

Publication Date:

March 19, 2021

ISBN/ISSN:

9781513574462/1018-5941

Stock No:

WPIEA2021087

Pages:

47

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