Green Fiscal Multiplier: Growth vs Emissions Decoupling

Fiscal Policy Controls

Annual public stimulus $80B/yr

Share invested green 55%

Leakage rate (savings+tax+imports) 35%

Decoupling elasticity 60%

Economy — Year 0.0

GDP index

1000.0

Fiscal multiplier

2.9×

Emissions vs baseline

100.0%

Green capital share

50.0%

Cumulative jobs created (green / brown)

0 / 0

Sector Towers

Green capital stock (renewables, retrofits, transit)

Fossil/brown capital stock (legacy energy, extraction)

How it works

Each simulated year, public stimulus I splits into a green share Iг = s·I and a brown share Iь = (1−s)·I. Both feed sector capital stocks that depreciate at rate δ:

dKg/dt = Ig − δ·Kg
dKb/dt = Ib − δ·Kb

The injection also drives a Keynesian fiscal multiplier. The leakage rate ℓ (share of each respent dollar lost to saving, tax, or imports) sets the multiplier m = 1/ℓ, and the resulting stimulus-driven output stock Y_s follows the same stock-flow pattern as capital:

m = 1 / ℓ
dYs/dt = m·I − δ·Ys
GDP(t) = Y0 + Ys(t)

Emissions intensity per unit of GDP falls as the green share of total capital, φ = Kg/(Kg+Kb), rises — governed by a decoupling elasticity e:

Intensity(t) = I0 · (1 − e·φ)
Emissions(t) = GDP(t) · Intensity(t)

Green and brown investment also convert into jobs at different rates (stylised coefficients in the spirit of published green-vs-fossil jobs-per-dollar studies from IRENA and NREL — illustrative, not a literal forecast): green capex creates roughly 7.5 jobs per $M invested per year versus 2.7 for brown capex, integrated as cumulative totals.

Stimulus size — total annual public investment I, split by the green share slider.
Green share — the fiscal instrument: how much of every stimulus dollar goes to green capital vs fossil capital.
Leakage rate — how much of each respent dollar escapes the domestic multiplier loop; lower leakage → a bigger multiplier m.
Decoupling elasticity — how strongly a greener capital mix cuts emissions per dollar of GDP, holding output fixed.

The two instanced towers group in the 3D city renders each sector's capital stock directly — green towers grow (and deepen in colour) as green capital accumulates, brown towers shrink and glow redder as their emissions intensity rises.

Green sector capital Brown/fossil sector capital

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Green Fiscal Multiplier: Growth vs Emissions Decoupling Simulator