An empirical study on green investment and economic growth based on investment multipliers

As one of the important tools of macro-economic policy evaluation, the investment multiplier has been widely applied in both theory and empirical evidence. However traditional investment multiplier does not reflect the environmental cost of economic development, which is not conducive to guiding the development of green economy. The concept and calculation model of green investment multiplier were proposed and Taihu Lake Basin was taken as an example to test the Keynesian four-sector investment multiplier (K_S), expanded investment multiplier (K_Z) and green investment multiplier (K_E) from 2006 to 2014. By comparing and analyzing their influencing parameters of the three types of investment multiplier, it revealed that K_S showed a light dynamic change from 2006 to 2014,with no obvious growth or downward trend, and the value of K_S was slightly greater than 1 which meant that it had a certain pulling effect on the economy, but not very large. The value of multipliers K_Z was greater than 2 and that of K_E mostly greater than 3, and especially the multi-year average value of K_E was 17.3 percentage points higher than that of K_S, indicating that the green investment had a significant pulling effect on the economy. K_E showed an increasing trend from 2006 to 2010, however, from year 2010, this trend had changed, with a downward trend of K_E. This indicated that the pulling effect of traditional investment on the economy had become weak after 2010. Green investment multiplier can organically link investment, economic growth and environmental costs, and help guide green development. Therefore, it is necessary to increase green investment support to lead a new round of economic growth.