Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-22T20:38:52.126Z Has data issue: false hasContentIssue false

A NOTE ON ENVIRONMENTAL POLICY AND PUBLIC DEBT STABILIZATION

Published online by Cambridge University Press:  19 December 2011

Mouez Fodha*
Affiliation:
University Paris 1 Panthéon-Sorbonne
Thomas Seegmuller
Affiliation:
CNRS and GREQAM
*
Address correspondence to: Mouez Fodha, Centre d'Economie de la Sorbonne, Université Paris 1 Panthéon-Sorbonne, Maison des Sciences Economiques, 106-112 Bld de l'Hôpital, 75013 Paris Cedex, France; e-mail: [email protected].

Abstract

This article analyzes the consequences of environmental tax policy under public debt stabilization constraint. A public sector of pollution abatement is financed by a tax on pollutant emissions and/or by public debt. At the same time, households can also invest in private pollution abatement activities. We show that the economy may be characterized by an environmental-poverty trap if debt is too large or public abatement is not sufficiently efficient with respect to the private one. However, there exists a level of public abatement and debt at which a stable steady state is optimal.

Type
Notes
Copyright
Copyright © Cambridge University Press 2011

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Bovenberg, A.L. and Heijdra, B.J. (1998) Environmental tax policy and intergenerational distribution. Journal of Public Economics 67, 124.CrossRefGoogle Scholar
Diamond, P. (1965) National debt in a neoclassical growth model. American Economic Review 55, 11261150.Google Scholar
Heijdra, B.J., Kooiman, J.P., and Ligthart, J.E. (2006) Environmental quality, the macroeconomy, and intergenerational distribution. Resource and Energy Economics 28, 74104.CrossRefGoogle Scholar
Ifen (2006) L'environnement en France 2006. Paris: La Découverte.Google Scholar
IPCC (1996) Climate Change 1995: The Science of Climate Change. Cambridge, UK: Cambridge University Press.Google Scholar
John, A. and Pecchenino, R. (1994) An overlapping generations model of growth and the environment. Economic Journal 104, 13931410.CrossRefGoogle Scholar
John, A., Pecchenino, R., Schimmelpfennig, D., and Schreft, S. (1995) Short-lived agents and the long-lived environment. Journal of Public Economics 58, 127141.CrossRefGoogle Scholar
Lieb, C.M. (2004) The environmental Kuznets curve and flow versus stock pollution: The neglect of future damages. Environmental and Resource Economics 29, 483506.CrossRefGoogle Scholar
Liu, D.H.F. and Liptak, B.G. (2000) Air Pollution. Boca Raton, FL: Lewis Publishers/CRC Press.Google Scholar
Ono, T. (1996) Optimal tax schemes and the environmental externality. Economics Letters 53, 283289.CrossRefGoogle Scholar
Ono, T. and Maeda, Y. (2001) Is aging harmful to the environment? Environmental and Resource Economics 20, 113127.CrossRefGoogle Scholar
Seegmuller, T. and Verchère, A. (2007) A note on indeterminacy in overlapping generations economies with environment and endogenous labor supply. Macroeconomic Dynamics 11, 423429.Google Scholar
Solow, R. (1974) Intergenerational equity and exhaustible resources. Review of Economic Studies 41, 2945.CrossRefGoogle Scholar
Solow, R. (1986) On the intergenerational allocation of natural resources. Scandinavian Journal of Economics 88, 141149.CrossRefGoogle Scholar
Zhang, J. (1999) Environmental sustainability, nonlinear dynamics and chaos. Economic Theory 14, 489500.CrossRefGoogle Scholar