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Environmental policy and economic growth: the macroeconomic implications of the health effect

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  • Chen Jhy-hwa

    (Department of Economics, Tamkang University, No.151, Yingzhuan Road, Danshui Dist., New Taipei City, Taiwan)

  • Shieh Jhy-yuan

    (Department of Economics, Soochow University, 56, Kuei-Yang St., Sec. 1, Taipei, Taiwan)

  • Chang Juin-jen

    (Institute of Economics, Academia Sinica, 128 Academia Road, Sec. 2, Nankang, Taipei 115, Taiwan)

Abstract

This paper introduces health effects in an endogenous growth model with environmental concerns. To highlight the importance of health effects, we examine the time allocation of households in regard to leisure, labor, and health care, which play a crucial role in affecting the impacts of public abatement and emission taxation. We not only show that the health effect modifies the conventional consequences of environmental policy, but also thoroughly compare the effectiveness of these two distinct environmental policies. We also conduct transition and welfare analyses in a dynamic optimizing model which offers novel policy implications, given that the literature on health effects is silent on these issues.

Suggested Citation

  • Chen Jhy-hwa & Shieh Jhy-yuan & Chang Juin-jen, 2015. "Environmental policy and economic growth: the macroeconomic implications of the health effect," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(1), pages 1-31, January.
    • Handle: RePEc:bpj:bejmac:v:15:y:2015:i:1:p:31:n:13
    DOI: 10.1515/bejm-2014-0087
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    2. Sichao Wei & David Aadland, 2021. "Pollution permits, green taxes, and the environmental poverty trap," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 1032-1052, May.

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