direct effects

The effect of government expenditure on the environment: An empirical investigation. Ecological Economics 91(C): 48-56

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.