The analysis of the relationship among economic growth, environmental pollution and public expenditures

Economic growth is the primarily will of the developed or developing countries. Because countries whose economy is growing increase their employment. Inputs such as technology, manpower, energy cause increase in output. Mainly, the role of the energy is quite important. The effect of theEnergy as an internal factor in economic growth has been addressed recently. The indirect effect of public expenditures as an external factor has taken its place in researches.In our study, 1980-2017 period of annual data of Word Data Bank (WDI) are used and public expenditures of Turkey's economy are examined for the analysis of economic growth and environmental pollution correlation; by utilizing the limited information maximum likelihood method, FMOLS, DOLS, classical OLS, ARDL and Granger causality analysis. As a result this study, the effect of public expenditures upon economic growth came out positive in limited information maximum likelihood method and it was statistically significant. Furthermore, this result was also confirmed as positive through the methods of FMOLS, DOLS and classical OLS. However, the effect of public expenditures upon economic growth came out negative and statistically insignificant as a result of ARDL test. As for the environmental relation analysis, a negative (-) correlation is detected through the classical OLS, DOLS and ARDL estimations. However, 1% increase in carbon emission boosts economic growth 0.27 % according to the results of FMOLS. Finally, according to the Granger causality analysis, a one-way causality relation is identified from economic growth to central government expenditures. Keywords: Public expenditures, economic growth, Co2, Turkey