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The Challenge of Addressing Consumption Pollutants with Fiscal Policy

Gregmar Galinato ()

No 2014-1, Working Papers from School of Economic Sciences, Washington State University

Abstract: We develop a theoretical model that elucidates the relationship between the quality of governance, composition of government spending and pollution as a by-product of the consumption process. We find that a shift in government spending towards goods that alleviate market failure increases income, which raises consumption pollution, but also increases environmental regulations, which decreases consumption pollution. Conditional on the government adopting a democratic regime, the effect through environmental regulations outweigh the effect through income leading to lower consumption pollution. We estimate an empirical model and find that the results support our theoretical predictions.

Keywords: Government spending; public goods; consumption based pollution; democracy (search for similar items in EconPapers)
JEL-codes: H11 H20 O13 Q53 (search for similar items in EconPapers)
Pages: 42 pages
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Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link) First version, 2014 (application/pdf)

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Journal Article: The challenge of addressing consumption pollutants with fiscal policy (2017) Downloads
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