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The Missing Government in Green Finance

Author

Listed:
  • Julian Lamprecht
  • Marcel Thum

Abstract

The recent literature on green finance has extensively discussed the extent to which responsible investors can contribute to a greener economy, particularly regarding climate change. Somewhat surprisingly, governments as key players in climate policies are practically absent in this analysis. Using a simple model of private and public provision of a public good, we show that, even under favorable conditions, interaction with government policies renders private green investment ineffective and maybe even detrimental to making the economy truly greener. This result does not only hold for a benevolent, welfare-maximizing government but also in a political-economy setting with a medianvoter government.

Suggested Citation

  • Julian Lamprecht & Marcel Thum, 2024. "The Missing Government in Green Finance," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 80(3), pages 332-349.
    • Handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2024-0014
    DOI: 10.1628/fa-2024-0014
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    More about this item

    Keywords

    green finance; corporate social responsibility; climate change; private provision of public goods;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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