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The effect of government expenditure on the environment:An empirical investigation

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  • Halkos, George E.
  • Paizanos, Epameinondas Α.

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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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 91 (2013)
Issue (Month): C ()
Pages: 48-56

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Handle: RePEc:eee:ecolec:v:91:y:2013:i:c:p:48-56

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Web page: http://www.elsevier.com/locate/ecolecon

Related research

Keywords: Government expenditure; Environment; Direct effects; Indirect effects;

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References

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Citations

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Cited by:
  1. Gregmar Galinato & Suzette Galinato, 2013. "The Role of Government Spending on Deforestation and Carbon Dioxide Emissions from Land Use Change," Working Papers 2013-14, School of Economic Sciences, Washington State University.
  2. Gregmar Galinato, . "The Challenge of Addressing Consumption Pollutants with Fiscal Policy," Working Papers 2014-1, School of Economic Sciences, Washington State University.
  3. Halkos, George & Paizanos, Epameinondas, 2014. "Exploring the effect of economic growth and government expenditure on the environment," MPRA Paper 56084, University Library of Munich, Germany.

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