AN INVESTIGATION OF THE RELATIONSHIP BETWEEN GREEN FISCAL POLICY AND ECONOMIC GROWTH: A CASE STUDY OF THE GREEN LINE MASS RAPID TRANSIT PROJECT

Abstract

This study aimed to examine the effectiveness of green fiscal policy, specifically focusing on the Green Line mass transit project, on Thailand's economic growth. Using annual time-series data over 31 years (1994-2024), the study analyzed gross domestic product (GDP), public investment in the Green Line (GI), government green expenditure (GGE), and macroeconomic control variables. Data were analyzed using the Autoregressive Distributed Lag (ARDL) and Error Correction Models (ECM), incorporating ADF and PP unit root tests, alongside the Bounds Test for long-term equilibrium. The results revealed that Green Line investment (GI) significantly stimulated the economy in the short term (p = 0.084) through employment and income circulation, but lacked long-term significance (p = 0.114). This is because indirect benefits of large infrastructure, such as reduced travel time and energy costs, are not fully captured by GDP. Conversely, green expenditure (GGE) showed no short-term significance (p = 0.817) but had a significant positive long-term impact (p = 0.013), reflecting cumulative benefits like resource efficiency and improved quality of life. The error correction coefficient was -0.2163, indicating a 21.63% annual adjustment rate toward long-term equilibrium. In conclusion, green fiscal policy effectively promotes economic growth, though its impact depends on the specific policy tool and timeframe. Infrastructure investment primarily drives short-term economic activities, whereas environmental expenditure yields distinct and sustainable long-term benefits.

Keywords: Green Fiscal Policy, Economic Growth, Fiscal Multiplier, ARDL Model, Green Line Mass Rapid Transit