Macro Analysis /
United Kingdom

GB : Strategy - How effective is green investment spending?

    Joachim Klement
    Joachim Klement

    Analyst - Strategy, Accounting, and Sustainability (SAS)

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    CGS-CIMB
    28 March 2022
    Published byCGS-CIMB

    When it comes to government spending, a key variable to identify is the fiscal multiplier. The fiscal multiplier measures how much economic output rises in response to one additional dollar/pound/euro invested by the government. Multipliers above 1.0 are what governments are looking for because they mean that the economy (and thus tax revenues) grows more than the government spends. As a reference, most infrastructure investments like roads have a fiscal multiplier around 1.1 to 1.3.