The Economic Opportunity Cost of Green Recovery Plans
29 Pages Posted: 21 Feb 2023
There are 2 versions of this paper
The Economic Opportunity Cost of Green Recovery Plans
The Economic Opportunity Cost of Green Recovery Plans
Date Written: February 13, 2023
Abstract
Advocates in several countries have promoted a “green recovery” from the pandemic, with an emphasis on measures to address climate objectives. We evaluate proposals for the United States and find that as stated, ambitious plans to further cut emissions from transportation and electricity will require more inputs to produce the same outputs, resulting in recurring costs of up to $483 billion per year. We forecast that real GDP and consumption will be 2-3 percent less in the long run if policies are implemented as stated, underscoring the opportunity costs of achieving green objectives when resources might be more efficiently deployed.
JEL Classification: Q40,Q48,Q54,Q58
Suggested Citation: Suggested Citation