Fiscal Spending and the Environment: Theory and Empirics

Ramon Lopez, Gregmar Galinato () and Asif Islam

No 2009-22, Working Papers from School of Economic Sciences, Washington State University

Abstract: During economic crises, governments often increase fiscal spending to stimulate the economy. While the fiscal spending surge is sometimes temporary, recessions are opportunities to revise the spending composition often in favor of expenditures in social programs and other public goods which tend to 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 public goods reduces pollution while increasing total government spending has an ambiguous effect on pollution. We find consistent empirical results for various air and water pollutants. Increased environmental sustainability may be an important silver lining of economic crises.

Keywords: Government Spending; Public Goods; Pollution (search for similar items in EconPapers)
JEL-codes: H11 H20 O13 Q53 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2009-08
New Economics Papers: this item is included in nep-env and nep-pbe
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Fiscal spending and the environment: Theory and empirics (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:wsu:wpaper:galinato-4

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