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

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  • Halkos, George

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 effect of government spending on pollution and the indirect effect which operates through government spending impact on per capita income and the subsequent effect of income level on pollution. In order to take into account the dynamic nature of the relationships examined, appropriate econometric methods are used. For both sulfur dioxide and carbon dioxide, government spending is estimated to have a negative direct impact on per capita emissions. The indirect effect on sulfur dioxide is found to be negative for low levels of income and then becomes positive as income level increases, while it remains negative for carbon dioxide for the whole income range of the sample. The resultant total effects follow the patterns of the indirect effects, which dominate their respective direct ones for each pollutant. Policy implications, occurring from the paper’s results, range according to the level of income of the considered countries.

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  • Halkos, George, 2012. "The impact of government expenditure on the environment: An empirical investigation," MPRA Paper 39957, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:39957
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    More about this item

    Keywords

    Government expenditure; environment; direct and indirect effects;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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