AUTHOR
Ronald B. Davies
Abstract
Innovation is widely believed to play an important role in addressing climate change. Nevertheless, estimating such effects is difficult due to the endogeneity of innovation measures. I use a novel shift-share instrument building from cross-border patent citations to deal with this endogeneity. Using data for 27 European countries across 20 manufacturing industries from 1995-2019, I find evidence of significant endogeneity bias that overstates the causal effect of patents on emissions. Further, if anything, it seems that new non-green patents may increase emissions. This then suggests that relying on new technologies alone to solve the climate crisis is potentially ineffective..
Keywords: Emissions, Patents, Shift-share
Publication Date
September 2025
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