Fiscal spending and the environment: Theory and empirics

Ramon Lopez, Gregmar Galinato () and Asif Islam

Journal of Environmental Economics and Management, 2011, vol. 62, issue 2, 180-198

Abstract: During economic crises, governments often increase fiscal spending to stimulate the economy. While the fiscal spending surge may be temporary, spending composition is often altered in favor of expenditures on social programs and other public goods which may persist over time. We model and measure the impact of fiscal spending patterns on the environment. The model predicts that a reallocation of government spending composition towards social and public goods reduces pollution. However, increasing total government spending without altering its composition does not reduce pollution. We empirically test these predictions for air and water pollutants showing that they are fully supported.

Keywords: Government; spending; Spending; in; public; goods; Pollution (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (97)

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Working Paper: Fiscal Spending and the Environment: Theory and Empirics (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:62:y:2011:i:2:p:180-198

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