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

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: 2024:02
Publisher: Department of Economics, Swedish University of Agricultural Sciences

SLU Authors

• Ferguson, Shon

  • Department of Economics, Swedish University of Agricultural Sciences
    

• Nolgren, Johanna

  • Department of Economics, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Economics

Permanent link to this page (URI)

https://res.slu.se/id/publ/131720