Government spending has significant environmental implications. This paper analyzes the effect of... more Government spending has significant environmental implications. This paper analyzes the effect of the allocation of government spending between public goods broadly defined and private goods or non-social subsidies on air and water pollution. The theoretical model predicts that a reallocation of expenditures from private subsidies to public goods improves environmental quality by reducing production pollution. We estimate an empirical model that shows that such a reallocation causes a significant reduction in air pollutants namely sulfur dioxide and lead and an improvement in water quality measures including dissolved oxygen and biological oxygen demand.
Government spending should be regarded as a social and political phenomenon, not merely as a tech... more Government spending should be regarded as a social and political phenomenon, not merely as a technical choice. We argue that there is an implicit contract between the organized elites and politicians which often leads to a pro-elite allocation of public resources. A natural and simple taxonomy of government spending follows from this view: spending in public goods broadly defined which mitigate market failures versus spending in non-social subsidies, mainly a vehicle to serve the elites. We theoretically and empirically show that pro-elite spending biases are costly in terms of economic growth. The empirical findings are exceptionally robust.
We estimate the effect of government spending on firm production as measured by the value of sale... more We estimate the effect of government spending on firm production as measured by the value of sales in developing economies. We contribute to the literature by exploring the relationship between the size and composition of government spending on firm sales by workforce size and market destination of goods using instruments based on political institutions and fractionalization. We use a unique firm‐level dataset across developing economies coupled with national government spending data. After instrumenting for the fiscal policies, we find that an increase in the proportion of spending that alleviates market failures significantly boosts sales output especially in non‐exporting small and medium sized firms but not in large exporting firms. Total government spending positively affects sales output for firms of all sizes and non‐exporters. The effect of the composition of government spending on firm output is more elastic than the effect of the size of government spending. The results ar...
Journal of Environmental Economics and Management, 2011
During economic crises, governments often increase fiscal spending to stimulate the economy. Whil... more During economic crises, governments often increase fiscal spending to stimulate the economy. While the fiscal spending surge is sometimes temporary, recessions are opportunities to revise the spending composition often in favor of expenditures in social programs and other public goods which tend to persist over time. We model and measure the impact of fiscal spending patterns on the environment. The model predicts that a reallocation of government spending composition towards public goods reduces pollution while increasing total government spending has an ambiguous effect on pollution. We find consistent empirical results for various air and water pollutants.
Government spending has significant environmental implications. This paper analyzes the effect of... more Government spending has significant environmental implications. This paper analyzes the effect of the allocation of government spending between public goods broadly defined and private goods or non-social subsidies on air and water pollution. The theoretical model predicts that a reallocation of expenditures from private subsidies to public goods improves environmental quality by reducing production pollution. We estimate an empirical model that shows that such a reallocation causes a significant reduction in air pollutants namely sulfur dioxide and lead and an improvement in water quality measures including dissolved oxygen and biological oxygen demand.
Government spending should be regarded as a social and political phenomenon, not merely as a tech... more Government spending should be regarded as a social and political phenomenon, not merely as a technical choice. We argue that there is an implicit contract between the organized elites and politicians which often leads to a pro-elite allocation of public resources. A natural and simple taxonomy of government spending follows from this view: spending in public goods broadly defined which mitigate market failures versus spending in non-social subsidies, mainly a vehicle to serve the elites. We theoretically and empirically show that pro-elite spending biases are costly in terms of economic growth. The empirical findings are exceptionally robust.
We estimate the effect of government spending on firm production as measured by the value of sale... more We estimate the effect of government spending on firm production as measured by the value of sales in developing economies. We contribute to the literature by exploring the relationship between the size and composition of government spending on firm sales by workforce size and market destination of goods using instruments based on political institutions and fractionalization. We use a unique firm‐level dataset across developing economies coupled with national government spending data. After instrumenting for the fiscal policies, we find that an increase in the proportion of spending that alleviates market failures significantly boosts sales output especially in non‐exporting small and medium sized firms but not in large exporting firms. Total government spending positively affects sales output for firms of all sizes and non‐exporters. The effect of the composition of government spending on firm output is more elastic than the effect of the size of government spending. The results ar...
Journal of Environmental Economics and Management, 2011
During economic crises, governments often increase fiscal spending to stimulate the economy. Whil... more During economic crises, governments often increase fiscal spending to stimulate the economy. While the fiscal spending surge is sometimes temporary, recessions are opportunities to revise the spending composition often in favor of expenditures in social programs and other public goods which tend to persist over time. We model and measure the impact of fiscal spending patterns on the environment. The model predicts that a reallocation of government spending composition towards public goods reduces pollution while increasing total government spending has an ambiguous effect on pollution. We find consistent empirical results for various air and water pollutants.
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Papers by Asif Islam