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The Macroeconomic Impact of the Porter Hypothesis: Sustainability and Environmental Policies in a Post-Keynesian Model

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  • Giulio Guarini

Abstract

The aim of the paper is to propose a post-Keynesian analysis of the Porter Hypothesis (PH) according to which regulation policies can bring about new economic opportunities by generating ‘green’ environmental innovations. Firstly, I illustrate the main features of the PH. Secondly, a Post-Keynesian growth model is developed by focusing on the macroeconomic impact of the PH. Finally, two equations of the model are estimated, an investment function and a green productivity function, by applying the GMM for panel data to European countries, over the period 1999–2012. The theoretical findings concern the potential rebound effect of regulation if its multiplier effect is greater than its innovation effect and the need for a policy mix to achieve environmental and socio-economic goals together. The empirical section verifies both the weak version of the PH, according to which environmental policies can stimulate green productivity, and (indirectly) the strong version of the PH by estimating the positive impact of green productivity dynamics on private investment.

Suggested Citation

  • Giulio Guarini, 2020. "The Macroeconomic Impact of the Porter Hypothesis: Sustainability and Environmental Policies in a Post-Keynesian Model," Review of Political Economy, Taylor & Francis Journals, vol. 32(1), pages 30-48, July.
    • Handle: RePEc:taf:revpoe:v:32:y:2020:i:1:p:30-48
    DOI: 10.1080/09538259.2020.1748308
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    Cited by:

    1. Guarini, Giulio & da Costa Oreiro, José Luis, 2023. "Ecological transition and structural change: A new-developmentalist analysis," Socio-Economic Planning Sciences, Elsevier, vol. 90(C).
    2. Bach Nguyen & Nhung Vu, 2024. "Does intrinsic motivation or extrinsic pressure matter more? An exploratory study of small businesses going green and innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 3855-3886, July.
    3. Daniel Moura da Costa Teixeira & Helder Lara Ferreira Filho & Jose Luis Oreiro, 2023. "Environmental Sustainability and the Economic Complexity: Policy Implications for a New Developmentalism Strategy," Working Papers PKWP2312, Post Keynesian Economics Society (PKES).
    4. Zhou, Di & Zhong, Zhuoxi & Chen, Lubin & Gao, Weixin & Wang, Mingzhe, 2022. "Can the joint regional air pollution control policy achieve a win-win outcome for the environment and economy? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 13-33.

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