working paper

Lessons Learned on Green Stimulus

Case Studies from the Global Financial Crisis

Joel Jaeger Michael I. Westphal Corey Park
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  • About one-sixth of the stimulus spending in response to the 2008–09 global financial crisis was allocated to “green” measures, when using a broad definition of the term.
  • The experience of economies like the United States, South Korea, China, and the European Union demonstrates that green investments helped economies recover, created jobs, and built up new industries.
  • There were disparities in the speed in which countries were able to disburse green stimulus, and in some cases not all the spending that was announced materialized. A lack of transparency in many countries made it difficult to hold governments accountable for their green spending.
  • Global CO2 emissions fell during the economic contraction but rebounded strongly after the recovery. While few conclusions can be drawn about the emissions impact of green stimulus measures, it is clear there were not enough accompanying reforms to incentivize a low-carbon transition.
  • The lessons from the global financial crisis can be applied to the COVID-19 economy recovery. Countries around the world have a chance to design economic recovery packages that quickly create jobs and improve the economy, while also providing climate cobenefits.
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