Short/Medium-Term Macroeconomic Impact of Investment Associated with 'Grenelle de l'Environnement' Investments on Growth and Employment

The 'Grenelle de l'Environnement' is a French policy aimed at achieving the objectives defined in the EU climate and energy package. This study evaluates the short- to medium-term impact of the main economic measures of 'Grenelle' on employment and growth. The simulations run with the macro-econometric model Mesange show a positive impact of these measures on GDP and employment in the short run, mainly via the investment multiplier. The impact turns negative from 2020 on because investment slows and taxes increase to finance the latter. These results are robust to different assumptions on oil prices, household saving behaviour, public funding, and productivity gains associated with new transport projects. However, they do not factor in the impact of 'Grenelle' on the environment, competitiveness, and well-being