Greening the American states

Over the past two decades, American state governments have pursued diverse climate and energy policies, yet their relative success in fostering ’greener’ economies is unclear. To address this, I introduce the Green Economy Index, a unified, state-level measure of progress in transitioning towards a greener economy, capturing both temporal and cross-sectional variation from 2000 to 2022. The index reveals moderate improvements across all states. Cross-sectionally, states with more stringent climate policies and Democratic control of state government outperform others. However, when accounting for state and region-year fixed effects, as well as prior levels of the Green Economy Index, neither more stringent climate policies nor Democratic control predicts subsequent changes in the index. I also document diminishing marginal improvements in states that began the study period with relatively high scores on the Green Economy Index.