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Environmental investment and policy with distortionary taxes, and endogenous growth

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  • Fullerton, Don
  • Kim, Seung-Rae

Abstract

Recent studies consider public R&D spending that affects abatement knowledge and endogenous growth, distortionary taxes that affect capital formation, pollution taxes that affect environmental degradation, and regeneration that restores natural capital. Our model combines all those elements. The combination affects prior results, focusing on two parameters: the need for distorting taxes, and productivity of abatement knowledge relative to pollution. First, these two extensions can reverse prior findings that pollution tax revenue is always enough to pay for public R&D. Second, tax distortions and externalities alter prior findings that the ratio of public to private capital depends only on output elasticities. Third, dynamics affect prior static findings about other public spending "crowding out" environmental public goods. Fourth, a greater need for public spending can lead to greater increases in distorting taxes or pollution taxes. Fifth, greater environmental regulation can mean growth is higher or lower, even if welfare is higher.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 56 (2008)
Issue (Month): 2 (September)
Pages: 141-154

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Handle: RePEc:eee:jeeman:v:56:y:2008:i:2:p:141-154

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Web page: http://www.elsevier.com/locate/inca/622870

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Citations

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Cited by:
  1. Chu, Hsun & Lai, Ching-chong, 2014. "Abatement R&D, market imperfections, and environmental policy in an endogenous growth model," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 41(C), pages 20-37.
  2. Alexandru MINEA & Pascale COMBES MOTEL & Jean-Louis COMBES & Patrick VILLIEU, 2013. "Deforestation and Seigniorage in Developing Countries: A Tradeoff?," Working Papers, CERDI 201322, CERDI.
  3. Pereira, Alfredo M. & Pereira, Rui M., 2014. "On the environmental, economic and budgetary impacts of fossil fuel prices: A dynamic general equilibrium analysis of the Portuguese case," Energy Economics, Elsevier, Elsevier, vol. 42(C), pages 248-261.
  4. Oueslati, Walid, 2014. "Environmental tax reform: Short-term versus long-term macroeconomic effects," Journal of Macroeconomics, Elsevier, Elsevier, vol. 40(C), pages 190-201.
  5. Ramón López & Sang Won Yoon, 2013. "Sustainable Economic Growth: Structural Transformation with Consumption Flexibility," Working Papers, University of Chile, Department of Economics wp375, University of Chile, Department of Economics.
  6. Tang, Erzi & Liu, Fengchao & Zhang, Jingjing & Yu, Jiao, 2014. "A model to analyze the environmental policy of resource reallocation and pollution control based on firms' heterogeneity," Resources Policy, Elsevier, Elsevier, vol. 39(C), pages 88-91.
  7. Minoru Nakada, 2010. "Environmental Tax Reform and Growth: Income Tax Cuts or Profits Tax Reduction," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 47(4), pages 549-565, December.
  8. Chu, Hsun & Lai, Ching-Chong & Cheng, Chu-Chuan, 2013. "Tax Havens, Growth, and Welfare," MPRA Paper 52878, University Library of Munich, Germany, revised Sep 2013.
  9. Walid Oueslati, 2013. "Short and Long-term Effects of Environmental Tax Reform," Working Papers, Fondazione Eni Enrico Mattei 2013.09, Fondazione Eni Enrico Mattei.
  10. Pascale Combes Motel & Johanna Choumert & Alexandru Minea & Thomas Sterner, 2014. "Explorations in the Environment–Development Dilemma," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 57(4), pages 479-485, April.
  11. Mónica Meireles & Isabel Soares & Óscar Afonso, 2010. "Economic Growth, Ecological Technology and Public Intervention," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 378, Universidade do Porto, Faculdade de Economia do Porto.
  12. Xepapadeas, Anastasios, 2005. "Economic growth and the environment," Handbook of Environmental Economics, Elsevier, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 3, chapter 23, pages 1219-1271 Elsevier.
  13. Gregmar Galinato, . "The Challenge of Addressing Consumption Pollutants with Fiscal Policy," Working Papers, School of Economic Sciences, Washington State University 2014-1, School of Economic Sciences, Washington State University.

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