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The Causal Effects of Climate Investment Subsidies: Regression Discontinuity Evidence from Swedish Firms

Ferguson, Shon; Nolgren, Johanna

Abstract

This paper provides new empirical evidence on the firm-level economic impacts of a Swedish grant program that subsidizes firms’ investments in greenhouse gas emissionsreducing projects. We exploit a discontinuity in the assignment mechanism in the program to estimate causal effects of investment subsidies on investment additionality and firm growth. Combining highly-detailed data on the details of each application with detailed firm-level balance sheet data on investment and other aspects of firm performance provides a range of new results. Our estimates suggest that the grant scheme led to increases in investment, turnover and the number of employees. The results indicate a substantial crowding-in effect on investment.

Keywords

abatement; additionality; investment grants; subsidies; climate policy

Published in

Working Paper Series / Swedish University of Agricultural Sciences, Department of Economics
2024, number: 2024:02Publisher: Department of Economics, Swedish University of Agricultural Sciences