The Impact of Intergovernmental Grants on Innovation in Clean Energy and Energy Conservation: Evidence from the American Recovery and Reinvestment Act.

This research examines state-level determinants of technological innovation in the alternative energy sector. In doing so it focuses on whether federal ARRA investments, designed to spur technological advances in energy technology, effectively achieved their stated objectives. Using a state-level fixed-effects regression model, we tested the effects of federal ARRA expenditures on innovation in the alternative energy sector from 2011 to 2015. State-level characteristics including amount of state financial support, electricity prices, influence of the industries that use renewable energy, and political influences are shown to be empirically important determinants of variation of innovation in alternative energy. The evidence suggests that all else held equal, the ARRA funds expended with the intent of increasing alternative energy technologies successfully led to this end.