Journal article
The challenge of addressing consumption pollutants with fiscal policy
Environment and development economics, Vol.22(5), pp.624-647
10/2017
Handle:
https://hdl.handle.net/2376/116900
Abstract
The authors develop a theoretical model that elucidates the relationship between the quality of governance, the composition of government spending and pollution as a by-product of the consumption process. In particular, they determine the impact of government spending that alleviates market failure such as subsidies to the poor which reduce credit market failure and environmental regulations to correct for pollution externality. It is found that a shift in government spending towards goods that alleviate market failure has countervailing effects – consumption pollution rises due to increases in income, but consumption pollution also falls due to increasing environmental regulations. Conditional on the government adopting a democratic regime, the effect through environmental regulations outweighs the effect through income leading to lower consumption pollution. The authors estimate an empirical model and find that the results support their theoretical predictions.
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Details
- Title
- The challenge of addressing consumption pollutants with fiscal policy
- Creators
- Gregmar I Galinato - School of Economic Sciences, Washington State University, Pullman, WA 99164, USA. Tel: 509-335-6382. E-mail: ggalinato@wsu.eduAsif Islam - Enterprise Analysis Unit, Development Economics Indicators Group, The World Bank USA. E-mail: aislam@worldbank.org
- Publication Details
- Environment and development economics, Vol.22(5), pp.624-647
- Academic Unit
- Economic Sciences, School of
- Publisher
- Cambridge University Press; Cambridge, UK
- Number of pages
- 24
- Identifiers
- 99900548249801842
- Language
- English
- Resource Type
- Journal article