Who’s Going Green and Why? Trends and Determinants of Green Investment

39 Pages Posted: 20 Dec 2011

See all articles by Luc Eyraud

Luc Eyraud

International Monetary Fund (IMF)

Abdoul Aziz Wane

International Monetary Fund (IMF) - African Department

Changchang Zhang

affiliation not provided to SSRN

Benedict Clements

International Monetary Fund (IMF) - African Department

Date Written: December 2011

Abstract

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.

Suggested Citation

Eyraud, Luc and Wane, Abdoul Aziz and Zhang, Changchang and Clements, Benedict, Who’s Going Green and Why? Trends and Determinants of Green Investment (December 2011). IMF Working Papers, Vol. , pp. 1-38, 2011. Available at SSRN: https://ssrn.com/abstract=1974848

Luc Eyraud

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Abdoul Aziz Wane (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

Changchang Zhang

affiliation not provided to SSRN

No Address Available

Benedict Clements

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

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