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Stochastic Pollution and Environmental Care in an Endogenous Growth Model

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  • Susanne Soretz

    (University of Hannover)

Abstract

The impact of pollution and abatement policy within a stochastic endogenous growth model is analyzed. Environmental care is provided by the government and financed through income taxation and government bonds. Due to environmental preferences and partial perception of the individual's impact on pollution, government debt influences equilibrium growth. Hence, there is an additional growth effect of income taxation due to portfolio adjustment. It is shown that the optimal income tax rate decreases with the perception of the influence of individuals on aggregate capital. In contrast, the impact of environmental preferences and uncertainty on optimal environmental policy is ambiguous. Copyright Blackwell Publishing Ltd and The Victoria University of Manchester, 2003.

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Bibliographic Info

Article provided by University of Manchester in its journal The Manchester School.

Volume (Year): 71 (2003)
Issue (Month): 4 (07)
Pages: 448-469

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Handle: RePEc:bla:manchs:v:71:y:2003:i:4:p:448-469

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  1. Stephen Turnovsky, 1998. "Fiscal Policy, Elastic Labor Supply, and Endogenous Growth," Working Papers, University of Washington, Department of Economics 0068, University of Washington, Department of Economics.
  2. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(3), pages 500-521, June.
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Cited by:
  1. Azomahou, Theophile & Mishra, Tapas, 2009. "Stochastic environmental effects, demographic variation, and economic growth," MERIT Working Papers 016, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  2. Wang, Min & Zhao, Jinhua & Bhattacharya, Joydeep, 2013. "Optimal Health and Environmental Policies in a Pollution-Growth Nexus," Staff General Research Papers, Iowa State University, Department of Economics 35994, Iowa State University, Department of Economics.
  3. Susanne Soretz, 2007. "Efficient Dynamic Pollution Taxation in an Uncertain Environment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 36(1), pages 57-84, January.

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