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On the Fiscal Strategies of Escaping Poverty-Environment Traps (and) Towards Sustainable Growth

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  • Nguyen Than Dao
  • Ottmar Edenhofer

Abstract

An economy with clean and dirty intermediate inputs may fall into a trap characterized by low environmental quality and low life expectancy, while the others converge to opposite steady states. We propose new strategies towards sustainable growth. They include: (i) taxes (subsidies) imposed on the production of intermediate inputs to improve environmental quality, and therefore, life expectancy and capital accumulation, in order to guarantee that an economy locked in a poverty-environment trap can escape the stagnation; (ii) taxes (subsidies) imposed on the production of intermediate inputs, consumption, and capital income in order to decentralize the transition to the social optimum.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4865.

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Date of creation: 2014
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Handle: RePEc:ces:ceswps:_4865

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Keywords: overlapping generations economy; poverty-environment trap; intermediate sectors; final good sectors; fiscal policy;

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  1. repec:hal:journl:halshs-00470655 is not listed on IDEAS
  2. Cuong Le Van & Katheline Schubert & Tu Anh Nguyen, 2007. "With Exhaustible Resources, Can A Developing Country Escape From The Poverty Trap?," Working Papers 15, Development and Policies Research Center (DEPOCEN), Vietnam.
  3. Fabio Mariani & Agustin Pérez-Barahona & Natacha Raffin, 2008. "Life expectancy and the environment," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00318677, HAL.
  4. Natacha Raffin & Thomas Seegmuller, 2012. "Longevity, pollution and growth," EconomiX Working Papers 2012-47, University of Paris West - Nanterre la Défense, EconomiX.
  5. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
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