Green Fiscal Policy and Firm Behaviour

This book is driven by the urgency of addressing the triple energy challenge— energy sustainability, security, and affordability. It explores a timely and policy-relevant research question, examining how effective green fiscal policies are in fostering the adoption of energy-efficient and environmentally sustainable technologies. It assesses whether such instruments are more effective when implemented in isolation or as part of a coordinated policy-mix, and investigates the right design, dosage and sequencing of their deployment. The analysis centers on three principal fiscal instruments—environmental taxes, green investment subsidies, and green investment tax credits—and distinguishes between different types of green technologies, namely superior cleaner production technologies and inferior end-of-pipe solutions.

The book provides a comprehensive and empirically rigorous evaluation of green fiscal policies and their role in the green transition, framing them as a crucial corrective mechanism capable of bridging the gap between private and social returns to green innovation. It offers a comprehensive review of modern econometric methodologies employed in this growing field—including fixed effects models, categorical treatment matching, difference-in-differences, complementarity and sequential analyses —and contributes an original empirical study on the impact of fiscal rule changes on technology adoption outcomes. Lastly, it offers policy recommendations for the implementation of green fiscal policies.

This volume serves as a valuable resource for a broad readership, including graduate students, academic researchers, international organizations, and policy professionals—particularly those concerned with finance and the environment.