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831. How do you feel about going green?

Working paper N. 831 Giugno 2020

Marwil J. Dávila-Fernández

DEPS, USiena

Alessia Cafferata

DEPS, USiena

Serena Sordi

DEPS, USiena

Abstract

Climate change is real. However, contrary to the near global consensus among the scientific community, international public opinion has moved in recent decades from increasing awareness to polarisation within and between nations. To the best of our knowledge, a comprehensive assessment of these trajectories formally addressing the interaction between agents and the (macro)economy is still missing. It is our purpose to ll such a gap in the literature by developing an agent-based model that allows for feedback effects between sentiments, environmental regulation and macroeconomic outcomes in an open economy set-up. Furthermore, we estimate the so-called green-Thirlwall law for a sample of 12 OECD countries between 1970 and 2014. Our findings confirm that Nordic countries have taken the lead in implementing green solutions. In terms of policy implications, we show that scientific literacy is a necessary but not sufficient condition for achieving a green-growth equilibrium. Policy makers should increase the public's response to Green House Gas emissions taking into account the fact that a successful communication strategy is conditional upon audience motivation.

Keywords

Climate change, green-growth, Thirlwall's law, Porter's hypothesis, motivated reasoning.

Jel Codes

O11, O44, Q01, Q56