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Pollution and the State: The Role of the Structure of Government

Ramon Lopez (), Gregmar Ignacio Galinato () and Asif Islam

No 48055, 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia from Australian Agricultural and Resource Economics Society

Abstract: Government spending has significant environmental implications. This paper analyzes the effect of the allocation of government spending between public goods broadly defined and private goods or non-social subsidies on air and water pollution. The theoretical model predicts that a reallocation of expenditures from private subsidies to public goods improves environmental quality by reducing production pollution. We estimate an empirical model that shows that such a reallocation causes a significant reduction in air pollutants namely sulfur dioxide and lead and an improvement in water quality measures including dissolved oxygen and biological oxygen demand.

New Economics Papers: this item is included in nep-env, nep-pbe and nep-res
Date: 2009
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