The Role of Government Spending on Deforestation and Carbon Dioxide Emissions from Land Use Change
AbstractThere has been a shift in fiscal policies in developing countries with good quality institutions. Government spending is less likely to be procyclical and instead countercyclical where spending rises during times of recession and falls during times of expansion to reduce the effects of the business cycle. We show using a theoretical model that moving towards a countercyclical spending pattern yields an unintended consequence: during times of recession there is an increase in deforestation and carbon dioxide emissions from land use change. We empirically test the results from our theoretical model and find that an increase in total government spending significantly increases forest land clearing for agricultural production in the short run leading to more carbon dioxide emissions. In the long run, there is a lower steady-state forest biomass and carbon dioxide emissions are significantly higher than in the short run.
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Bibliographic InfoPaper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2013-14.
Length: 40 pages
Date of creation: 2013
Date of revision:
Carbon dioxide emission; deforestation; government spending; public goods expenditure;
Find related papers by JEL classification:
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
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