This study provides an empirical analysis of the economic and environmental variables influencing investment dynamics in Brazil from 1990 to 2021. Utilizing data from reputable sources such as IPEADATA, IBGE, and SEEG, key indicators including investment, capacity utilization rate, profit share, and CO₂ emissions were examined. Statistical tests indicate that the series are integrated of order one, allowing for the use of a Vector Autoregression (VAR) model with five lags, following confirmation of stationarity in first differences by KPSS tests. The VAR model exhibited non-normal residuals but demonstrated homoscedasticity and structural stability, ensuring the reliability of dynamic inferences. Impulse response analysis revealed that positive shocks to profit share impact investment with a lagged and transitory effect, suggesting structural constraints and climate-related financial risks. Shocks in CO₂ emissions initially caused a negative reaction in investment, followed by recovery, reflecting sectoral adjustments and regulatory uncertainty. Shocks in capacity utilization induced an initial increase in investment, followed by oscillations, highlighting intertemporal adjustments and financial frictions. The results emphasize the complex interplay between economic performance and environmental factors, underscoring the need for public policies that complement profitability incentives with coordinated green investments. This research contributes to understanding economic mechanisms under environmental constraints, aligning with post-Kaleckian perspectives and contemporary concerns regarding the transition to a low-carbon economy.
