• green transition
• innovation
• monetary policy shocks

The urgency of the green transition can no longer be overlooked by policy-makers, as well as the crucial role of monetary policy following the 2022-2024 tightening cycle. This study explores the links between monetary policy shocks and the responses of both green innovation and renewable energy capacity, emphasizing long-run dynamics in the Euro Area. While research is developing on this topic for the United States (Jordà et al. 2024) (Ma & Zimmermann 2023), few works focus on the EA, especially regarding innovation and energy relationships.
Data were collected from PATSTAT for patent applications and Open Power System Data for renewable power plants over 2002-2019. Different models were estimated using Local Projections (Jordà et al. 2005) to predict the dynamic effects of monetary policy shocks, identified through the EA-MPD dataset (Altavilla et al. 2019).
Results indicate that monetary policy shocks have mild negative effects on patent applications overall. However, when examining asymmetric impacts of tightening shocks, findings suggest that effects on green innovation are stronger and more negative than on general innovation, especially on specific CPC classes. Regarding energy capacity, the analysis reveals that Germany is more sensitive than France to monetary policy shocks, mainly during tightening periods.