The Evolution of Renewable Energy Policy in OECD Countries: Aggregate Indicators and Determinants

Our first goal in this chapter is to build aggregate indicators of REP, as these can enable rigorous empirical analyses. This is a nontrivial and relevant task for many reasons. First, there is still a lack of consensus in economic literature about the best way to proxy environmental policies. Second, several studies rely on rough policy indicators able to account for only one dimension of the policy effort. Third, the construction of a single indicator of policy adoption can be useful for future research in many fields. The last point is particularly relevant in fields like environmental economics, where there is an increasing interest in quantifying and studying the effect of environmental policies on productivity and innovation. Similarly this approach can contribute to the emerging debate on political-economy model of policy formation, providing new and fresh data for empirical analysis. Given these premises, we believe that the present contribution could constitute a conceptual framework for all these researchers seeking to adopt a complex policy indicator in an empirical framework. Beside the index that we developed here, in the next section we present a comprehensive survey of different approaches found in literature and highlights their pros and cons.