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Can environmental taxation stimulate growth? The role of indeterminacy in endogenous growth models with environmental externalities

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  • Itaya, Jun-ichi
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    Abstract

    This paper examines the effects of environmental taxation on long-run growth in an infinitely lived representative agent model of endogenous growth with negative pollution externalities. The novelty of this paper lies in its investigation of how the long-run effects of environmental taxes are affected by the possible emergence of indeterminacy of equilibria in Romer's [1986. Increasing returns and long-run growth. Journal of Political Economy 94, 1002-1037] learning-by-doing model with endogenous labor supply. The analysis shows that environmental taxation generally enhances (harms) long-run growth when the balanced growth path is indeterminate (determinate).

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

    Volume (Year): 32 (2008)
    Issue (Month): 4 (April)
    Pages: 1156-1180

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    Handle: RePEc:eee:dyncon:v:32:y:2008:i:4:p:1156-1180

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    Web page: http://www.elsevier.com/locate/jedc

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    Cited by:
    1. Antoci, Angelo & Galeotti, Marcello & Russu, Paolo, 2011. "Poverty trap and global indeterminacy in a growth model with open-access natural resources," Journal of Economic Theory, Elsevier, vol. 146(2), pages 569-591, March.
    2. Gupta, Manash Ranjan & Barman, Trishita Ray, 2010. "Health, infrastructure, environment and endogenous growth," Journal of Macroeconomics, Elsevier, vol. 32(2), pages 657-673, June.
    3. Dimitrios Varvarigos, 2013. "Economic Growth, Health, and the Choice of Polluting Technologies: The Role of Bureaucratic Corruption," Discussion Papers in Economics 13/22, Department of Economics, University of Leicester.
    4. Yanase, Akihiko, 2011. "Impatience, pollution, and indeterminacy," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1789-1799, October.
    5. D. Dragone & L. Lambertini & A. Palestini, 2011. "Regulating Environmental Externalities through Public Firms: A Differential Game," Working Papers wp738, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. Beladi, Hamid & Chao, Chi-Chur & Hazari, Bharat R. & Laffargue, Jean-Pierre, 2009. "Tourism and the environment," Resource and Energy Economics, Elsevier, vol. 31(1), pages 39-49, January.
    7. Gupta, Manash Ranjan & Barman, Trishita Ray, 2009. "Fiscal policies, environmental pollution and economic growth," Economic Modelling, Elsevier, vol. 26(5), pages 1018-1028, September.
    8. Chu, Hsun & Lai, Ching-Chong, 2013. "Abatement R&D, Market Imperfections, and Environmental Policy in an Endogenous Growth Model," MPRA Paper 52869, University Library of Munich, Germany, revised Nov 2013.
    9. David Desmarchelier, 2013. "Effect of pollution on the total factor productivity and the Hopf bifurcation," Economics Bulletin, AccessEcon, vol. 33(3), pages 2328-2339.
    10. Carboni, Oliviero A. & Russu, Paolo, 2013. "Linear production function, externalities and indeterminacy in a capital-resource growth model," Journal of Mathematical Economics, Elsevier, vol. 49(5), pages 422-428.
    11. Fernández, Esther & Pérez, Rafaela & Ruiz, Jesús, 2012. "The environmental Kuznets curve and equilibrium indeterminacy," Journal of Economic Dynamics and Control, Elsevier, vol. 36(11), pages 1700-1717.
    12. Kenichi Akao & Shunsuke Managi, 2008. "A Tradable Permit System in an Intertemporal Economy: A General Equilibrium Approach," KIER Working Papers 658, Kyoto University, Institute of Economic Research.

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