Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/310362 
Year of Publication: 
2024
Series/Report no.: 
ADB Economics Working Paper Series No. 754
Publisher: 
Asian Development Bank (ADB), Manila
Abstract: 
Industrial policies greening the economy aim to accelerate the transition to net zero. We show that the United States (US) Inflation Reduction Act improved the supply of climate finance globally. Using granular data on global investment funds, we identify a novel international spillover channel of industrial policies. Sustainable global investment funds received more inflows upon the act announcement, in turn increasing their cross-border portfolio investments worldwide. Recipient economies better prepared to address climate change benefited most from sustainable global funds' additional investments. Non-US domiciled sustainable funds investing outside of the US account for most of the spillovers. The results are robust to a rich set of controls and fixed effects, absorbing recipient economies' demand for foreign funds. Thus, global investment funds have become an important conduit for the international spillover of climate policies.
Subjects: 
sustainable finance
climate policy
industrial policy
cross-border spillover
portfolio reallocation
portfolio capital flows
investment fund
Inflation Reduction Act
JEL: 
F3
G1
G2
Q5
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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