Building Back Better: How Big Are Green Spending Multipliers?

Download or read book Building Back Better: How Big Are Green Spending Multipliers? written by International Monetary Fund and published by International Monetary Fund. This book was released on 2021-03-19 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.