Series: Working Papers. 2611.
Author: Juan S. Mora-Sanguinetti, Cristina Peñasco and Rok Spruk
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Abstract
This paper analyses the impact of “green regulations” - i.e. those aimed at mitigating the effects of climate change and environmental externalities - on innovation, using a novel regulatory database covering the period 008-2022 for Spain. The database identifies regulations at both the national and regional levels through textual analysis. Employing a panel data approach, we assess how different types of environmental regulations - particularly those related to renewable energy - affect firm-level innovation activities. Our findings indicate that national-level green regulations have a positive effect on innovation, whereas regional-level regulations show mixed or negligible impacts. Importantly, the interaction between national and regional regulations, measuring the simultaneous production of legal texts at both levels, can foster innovation but at a reduced pace with respect to the sole production of regulation at the national level. Given the results forregional-level regulation, our findings provide evidence in favour of the hypothesis that regulatory fragmentation due to unequal, overlapping, inconsistent or conflicting procedure across jurisdictions may diminish these benefits.