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Financial Markets and Green Innovation

Author

Listed:
  • Aghion, Philippe
  • Boneva, Lena
  • Breckenfelder, Johannes
  • Laeven, Luc
  • Olovsson, Conny
  • Popov, Alexander
  • Rancoita, Elena

Abstract

Fulfilling the commitments embedded in the Paris Agreement requires a climate-technologyrevolution. Patented innovation of low-carbon technologies is lower in the EU than in selectedpeers, and very heterogeneous across member states. We motivate this fact with anendogenous model of directed technical change with government policy and financialmarkets. Variations in carbon taxes, R&D investment, and venture capital investment explaina large share of the variation in green patents per capita in the data. We discuss implicationsfor policy, concluding that governments can play a catalytic role in stimulating greeninnovation while the role of central banks is limited. JEL Classification: E5, G1, O4, Q5

Suggested Citation

  • Aghion, Philippe & Boneva, Lena & Breckenfelder, Johannes & Laeven, Luc & Olovsson, Conny & Popov, Alexander & Rancoita, Elena, 2022. "Financial Markets and Green Innovation," Working Paper Series 2686, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20222686
    Note: 1125999
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    References listed on IDEAS

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    Cited by:

    1. Richhild Moessner, 2024. "Effects of Green Technology Support Policies on Carbon Dioxide Emissions," CESifo Working Paper Series 11047, CESifo.
    2. Eneida Cifligu, 2024. "An Analysis of Albania’s Banking Sector: Current Trends and Future Prospects," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 171-185.
    3. Perone, Gaetano, 2024. "The relationship between labor market institutions and innovation in 177 European regions over the period 2000–2015," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 128-149.
    4. Tommaso Oliviero & Sandro Rondinella & Alberto Zazzaro, 2024. "Are green firms more financially constrained? The sensitivity of investment to cash flow," CSEF Working Papers 700, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    5. Benatti, Nicola & Groiss, Martin & Kelly, Petra & Lopez-Garcia, Paloma, 2024. "The impact of environmental regulation on clean innovation: are there crowding out effects?," Working Paper Series 2946, European Central Bank.
    6. Martijn Boermans, 2022. "A literature review of securities holdings statistics research and a practitioner’s guide," Working Papers 757, DNB.

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    More about this item

    Keywords

    central banks; climate change; directed technical change; financial markets; public policy;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G1 - Financial Economics - - General Financial Markets
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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