{
  "title": "Time-Varying Impacts of Government Spending on CO2 Emissions",
  "publication": "IMF Working Papers, July 4, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2025/07/01/time-varying-impacts-of-government-spending-on-co2-emissions-568002",
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  "summary": "A Bayesian factor-augmented interacted vector autoregression framework purified of expectations is employed to analyze how government spending shocks have impacted CO2 emissions in the United States from the 1980s to the pre-pandemic period.",
  "sections": [
    {
      "heading": "Methodology",
      "content": "- A Bayesian factor-augmented interacted vector autoregression framework purified of expectations is employed to analyze how government spending shocks have impacted CO2 emissions in the United States from the 1980s to the pre-pandemic period."
    },
    {
      "heading": "Key findings on emissions elasticities",
      "content": "- Consumption-generated emissions:\n  - Generally rose following fiscal expansions.\n  - The five-year elasticity to government spending declined from about 0.5 in the early 1980s to 0.1 by 2019.\n- Production-generated emissions:\n  - Increased in the early 1980s following positive government spending shocks, with a five-year elasticity near 0.4.\n  - Reversed course by the 1990s, eventually reaching an elasticity of –0.5 by the end of the sample."
    },
    {
      "heading": "Drivers and interaction variables",
      "content": "- Time-varying interaction variables examined suggest the following can mitigate—or even reverse—the emissions growth associated with economic expansions driven by government spending:\n  - Environmental regulation\n  - Tertiarization\n  - A larger share of spending on public goods\n- Government consumption, rather than investment, is chiefly responsible for the shifts observed in emissions elasticities."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Environment, Environmental policy, Expenditure, Government consumption, Greenhouse gas emissions, National accounts, Public investment spending\n- Keywords: CO2 emissions, consumption-generated emission, elasticity to government spending, emission elasticity, Environmental policy, fiscal policy, Global, Government consumption, government spending, government spending shock, Greenhouse gas emissions, IMF working paper No. 25/132, Public investment spending\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2025/07/01/time-varying-impacts-of-government-spending-on-co2-emissions-568002"
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    "Authors: Stefano Di Bucchianico, Mario di Serio, Matteo Fragetta, Giovanni Melina",
    "Published: July 4, 2025",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229013772.001",
    "A Bayesian factor-augmented interacted vector autoregression framework purified of expectations is employed to analyze how government spending shocks have impacted CO2 emissions in the United States from the 1980s to the pre-pandemic period.",
    "Consumption-generated emissions:",
    "Production-generated emissions:",
    "Time-varying interaction variables examined suggest the following can mitigate—or even reverse—the emissions growth associated with economic expansions driven by government spending:",
    "Government consumption, rather than investment, is chiefly responsible for the shifts observed in emissions elasticities.",
    "Subject: Environment, Environmental policy, Expenditure, Government consumption, Greenhouse gas emissions, National accounts, Public investment spending",
    "Keywords: CO2 emissions, consumption-generated emission, elasticity to government spending, emission elasticity, Environmental policy, fiscal policy, Global, Government consumption, government spending, government spending shock, Greenhouse gas emissions, IMF working paper No. 25/132, Public investment spending",
    "**Working Paper**"
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