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The impact of “Green Regulation” on firms’ innovation

Author

Listed:
  • Juan S. Mora-Sanguinetti

    (BANQUE DE FRANCE AND BANCO DE ESPAÑA)

  • Cristina Peñasco

    (BANQUE DE FRANCE AND UNIVERSITY OF CAMBRIDGE)

  • Rok Spruk

    (UNIVERSITY OF LJUBLJANA)

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 for regional-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.

Suggested Citation

  • Juan S. Mora-Sanguinetti & Cristina Peñasco & Rok Spruk, 2026. "The impact of “Green Regulation” on firms’ innovation," Working Papers 2611, Banco de España.
    • Handle: RePEc:bde:wpaper:2611
    DOI: https://doi.org/10.53479/42665
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    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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