Nexus between fiscal imbalances, green fiscal spending, and green economic growth: empirical findings from E-7 economies

The green economy is viewed as a cost-effective means of achieving sustainability around the globe, and a recent study inferred the nexus between the fiscal imbalances and green economic growth based on E-7 economies data. This paper attempts to answer how green fiscal spending ensures green economic growth and stabilizes fiscal imbalances in E-7 economies. The study findings highlighted the mechanism and viability of green fiscal spending for fiscal imbalances and green economic growth. More specifically, results showed that green fiscal spending extends green economic growth in Brazil with 30%, in China with 44%, in India with 11.8%, in Indonesia with 34%, Russia with 29.7%, and Turkey with 22.4%, respectively. Based on the findings, the following are our recommendations: (i) local governments should rebalance their fiscal budgets and invest more on public goods to assess local sustainable development, and (ii) several development initiatives specific to the local level should be employed to maximize fiscal spending.