The effect of government expenditure on the environment:An empirical investigation |
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| Institution: | 1. University of Lodz, Institute of Economics, Department of Macroeconomics, Rewolucji 1905 roku 41, 90214, Lodz, Poland;2. University of Lodz, Institute of Economics, Department of Economic Mechanisms, Rewolucji 1905 roku 41, 90214, Lodz, Poland;1. School of Public Administration, Southwestern University of Finance and Economics, Chengdu, Sichuan, 611130, China;2. School of Public Finance and Taxation, Southwestern University of Finance and Economics, Chengdu, Sichuan, 611130, China;3. State Key Joint Laboratory of Environment Simulation and Pollution Control, School of Environment, Beijing Normal University, Beijing, 100875, China;4. School of Forestry & Environmental Studies, Yale University, New Haven, CT, 06511, USA;5. School of Statistics and Applied Mathematics, Anhui University of Finance and Economics, Bengbu, Anhui, 233030, China;6. Institute of Environmental Ecological Engineering, Guangdong University of Technology, Guangzhou, Guangdong, 510006, China;1. The Davey Institute, The Davey Tree Expert Company, 5 Moon Library, State University of New York, Syracuse, NY 13210, United States;2. USDA Forest Service, 5 Moon Library, State University of New York, Syracuse, NY 13210, United States;1. College of Economics, Shenzhen University, China;2. Institute of Public Finance and Taxation, China Financial Policy Research Center, School of Finance, Renmin University of China, China;3. Institute of Public Finance and Taxation, China Financial Policy Research Center, School of Finance, Renmin University of China, No. 59 Zhongguancun Street, Haidian, Beijing, 100872, China;1. School of Business, Zhengzhou University, Henan, 450001, China;2. School of Economics, Quaid I Azam University, Islamabad, Pakistan;3. Department of Economics, University of Chakwal, Punjab, Pakistan;4. School of Economics, Department of Industrial Economics, Nanjing University, Nanjing, China;5. College of Economics and Management, Henan Agricultural University, Zhengzhou, 450002, China;6. School of Economics and Management, Northeast Normal University, Changchun, Jilin, 130024, China |
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| Abstract: | This paper examines the impact of government spending on the environment using a panel of 77 countries for the time period 1980–2000. We estimate both the direct and indirect effects of government spending on pollution. The indirect effect in particular operates through the impact of government spending on income and the subsequent effect of the income level on pollution. To take into account the dynamic nature and the potential endogeneity in the relationships examined, appropriate econometric methods are used. For SO2, government spending is estimated to have a negative direct impact on per capita emissions, while the direct effect is insignificant on CO2 pollution. The indirect effect on SO2 is negative for low income levels and becomes positive as income increases, while it remains negative for CO2 for the most part of the sample range. The resultant total effects follow the patterns of the indirect effects, which dominate their respective direct ones for each pollutant. Policy implications from the results vary depending on the income level of the considered countries. |
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