How Stimulating Is a Green Stimulus? The Economic Attributes of Green Fiscal Spending

Abstract

When deep recessions hit, some governments spend to rescue and recover their economies. Key economic objectives of such countercyclical spending include protecting and creating jobs while reinvigorating economic growth—but governments can also use this spending to achieve long-term social and environmental goals. During the coronavirus disease 2019 (COVID-19) pandemic, claims have been made that green recovery investments can meet both economic and environmental objectives. Here, we investigate the evidence behind these claims. We create a bespoke supervised machine learning algorithm to identify a comprehensive literature set. We analyze this literature using both structured qualitative assessment and machine learning models. We find evidence that green investments can indeed create more jobs and deliver higher fiscal multipliers than non-green investments. For policymakers, we suggest strong prioritization of green spending in recovery. For researchers, we highlight many research gaps and unalignment of research patterns with spending patterns.