... environmental action could actually have a positive effect. Suppose that electric utilities, in order to meet the new rules, decide to close some existing power plants and invest in new, lower-emission capacity. Well, that’s an increase in spending, and more spending is exactly what our economy needs.
More spending is exactly what our economy needs right now but it is not clear that (a) this is the right kind of spending (i.e., of the broken window sort) or (b) regulatory induced spending will be needed for the macroeconomy when it is likely to occur, unless you want to forecast a weak recovery for the next five years.
Just a quick glance at Google Scholar suggests that there isn't much research to back up any "effects of climate policy on the macroeconomy" assertion. Climate change policy needs to be evaluated on its real merits ... benefits and costs using microeconomics ... like they are doing over at Common Resources.
Also, in the words of Palmer, Oates and Portney in the 1995 JEP article criticizing the Porter hypothesis: "environmental programs must justify their costs by the benefits that improved environmental quality provides to society."
