The Macroeconomic Impact of the Porter Hypothesis: Sustainability and Environmental Policies in a Post-Keynesian Model
Author(s)
Date Issued
2020
Type
article
Journal
Abstract
The aim of the paper is to propose a post-Keynesian analysis of the
Porter Hypothesis (PH) according to which regulation policies can
bring about new economic opportunities by generating ‘green’
environmental innovations. Firstly, I illustrate the main features of
the PH. Secondly, a Post-Keynesian growth model is developed by
focusing on the macroeconomic impact of the PH. Finally, two
equations of the model are estimated, an investment function and
a green productivity function, by applying the GMM for panel
data to European countries, over the period 1999–2012. The
theoretical findings concern the potential rebound effect of
regulation if its multiplier effect is greater than its innovation
effect and the need for a policy mix to achieve environmental and
socio-economic goals together. The empirical section verifies both
the weak version of the PH, according to which environmental
policies can stimulate green productivity, and (indirectly) the
strong version of the PH by estimating the positive impact of
green productivity dynamics on private investment.