Event Details

Economics Research Seminar

Abtract: "Public spending may influence greenhouse gas emissions, thereby affecting the environment. To this end, we introduce the carbon-adjusted fiscal multiplier, which extends the standard concept by accounting for the carbon adjustment, defined as the dollar value of climate damages incurred per dollar of public spending. Using a climate production network that incorporates differences in carbon intensity across industries, we quantify the response of GDP and climate damages to sector-specific government spending shocks. The carbon adjustment varies inversely with sectors’ carbon intensity: while negligible for most industries, it can be as low as -0.71 for public spending in cement manufacturing."