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Philippe Aghion

26 July 2022
WORKING PAPER SERIES - No. 2686
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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 Code
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, 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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