International Review of Environmental and Resource Economics > Vol 9 > Issue 3–4

Environmental Macroeconomics: Economic Growth, Fiscal Spending and Environmental Quality

George E. Halkos, Laboratory of Operations Research, Department of Economics, University of Thessaly, Greece, halkos@econ.uth.gr Epameinondas A. Paizanos, Laboratory of Operations Research, Department of Economics, University of Thessaly, Greece,
 
Suggested Citation
George E. Halkos and Epameinondas A. Paizanos (2016), "Environmental Macroeconomics: Economic Growth, Fiscal Spending and Environmental Quality", International Review of Environmental and Resource Economics: Vol. 9: No. 3–4, pp 321-362. http://dx.doi.org/10.1561/101.00000079

Published: 05 Sep 2016
© 2016 G. E. Halkos and E. A. Paizanos
 
Subjects
Econometric models: Model choice and specification analysis,  Environmental Economics,  Environmental politics,  Government programs and public policy,  Public Economics: Environmental Taxation,  Public Economics: Public Goods
 
Keywords
JEL Codes: Q56Q32Q28E62Q01P28
Environmental macroeconomicseconomic growthnatural resourcesfiscal spending
 

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In this article:
1. Introduction
2. Economic Growth and the Environment
3. Fiscal Spending and the Environment
4. Concerns and Future Research Directions
5. Conclusions
Acknowledgements
References

Abstract

In the existing literature much attention has been given to the toolbox of regulatory policy instruments for addressing environmental concerns. Microeconomic treatment of environmental policy considers the optimal allocation of a given scale of resource flow within the economy, but neglects the scale and composition of economic activity relative to the ecosystem that supports it. An ecological approach to macroeconomics requires the appreciation of physical constraints to economic growth. This paper presents the theoretical underpinnings and the empirical findings of the literature on the link between economic growth and environmental quality, as well as of the relationship between fiscal spending and environmental degradation, by reviewing the relevant literature. The empirical findings on both relationships are not robust and therefore remain inconclusive. This paper provides conclusions and directions for future research which may assist to solve this ambiguity on the examined relationships.

DOI:10.1561/101.00000079

Erratum

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A. Islam was incorrectly referenced as F. Islam. The correct references are:

  • Galinato, G. I. and A. Islam. 2014. “The Challenge of Addressing Consumption Pollutants with Fiscal Policy”. Working Paper Series WP 2014-1, Washington State University, Washington.
  • Islam, A. and R. Lopez. 2015. “Government Spending and Air Pollution in the U.S”. International Review of Environmental and Resource Economics. 8(2): 139–189.
  • Lopez, R., G. I. Galinato, and A. Islam. 2011. “Fiscal Spending and the Environment: Theory and Empirics”. Journal of Environmental Economics and Management. 62: 180–198.