Government Spending and Air Pollution in the US

This study examines the effect of the composition of federal and state government spending on various important air pollutants in the US using a newly assembled data set of government spending. The results indicate that a reallocation of spending from private goods (RME) to social and public goods (PME) by state and local governments reduces sulfur dioxide concentrations while the composition of federal spending has no effect. A 10% percent increase in the share of state and local social and public goods government spending reduces air pollution concentrations by 3 to 5% for Sulfur Dioxide, 2 to 3% for particulate matter 2.5 and 1 to 2 % for ozone. The results are robust to various sensitivity checks.