The impact of institutional investments and net greenhouse gas emissions on government expenditure

The aim of ensuring to all citizens across the European Union (EU) Member States a quality life from social and economic perspectives became nowadays associated with the environmental aspects, public authorities assuming and targeting in this context more and more the objective of "green economies." In this context, public spending plays a vital role in relation to the quality of the environment and environmental sustainability, with government expenditure being able to influence the behavior of the involved agents. This paper aims to analyze the impact of institutional investments and net greenhouse gas on government expenditure. To evaluate the influence of public spending, we employed the ordinary least squares method and ARDL model (MG-mean group, PMD-pooled mean group estimator and DFE-the dynamic fixed effect model) and data regarding expenditures on education, science, and research and development (R&D) as describing the social side, the greenhouse gas emission variable as describing environmental sustainability and investments expenditures considering their beneficial effect on the economy, while controlling by real GDP per capita and foreign direct investment. Our panel includes data for the 27 member countries of the European Union, the period 2005-2020. The results of our study show that 61.5% of the variation of the general government expenditure variable is explained through the prism of the independent and control variables used in the model. The study demonstrates that the volume of government spending will depend on how government investors place their investments, but also on the amount of greenhouse gas emissions