Advanced Search
MyIDEAS: Login to save this paper or follow this series

Green Spending Reforms, Growth and Welfare with Endogenous Subjective Discounting

Contents:

Author Info

  • Eugenia Vella
  • Evangelos V. Dioikitopoulos
  • Sarantis Kalyvitis

Abstract

This paper studies optimal fiscal policy, in the form of taxation and the allocation of tax revenues between infrastructure and environmental investment, in a general-equilibrium growth model with endogenous subjective discounting. A green spending reform, defined as a reallocation of government expenditures towards the environment, can procure a double dividend by raising growth and improving environmental conditions, although the environment does not impact the production technology. Also, endogenous Ramsey and growth-maximizing policies eliminate the possibility of an 'environmental and economic poverty trap'. Finally, we examine the optimal response of the Ramsey government to greener preferences.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.ifw-kiel.de/VRCent/DEGIT/paper/degit_17/C017_045.pdf
Our checks indicate that this address may not be valid because: 404 Not Found (http://www.ifw-kiel.de/VRCent/DEGIT/paper/degit_17/C017_045.pdf [301 Moved Permanently]--> https://www.ifw-kiel.de/VRCent/DEGIT/paper/degit_17/C017_045.pdf). If this is indeed the case, please notify (Michaela Rank)
Download Restriction: no

Bibliographic Info

Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c017_045.

as in new window
Length: 43 pages JEL Classification: D90, E21, E62, H31, O44, Q28
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:deg:conpap:c017_045

Contact details of provider:
Postal: Kiellinie 66, D-24105 Kiel
Phone: +49 431 8814-206
Fax: +49 431 85853
Email:
Web page: http://www.degit.ifw-kiel.de/
More information through EDIRC

Related research

Keywords: endogenous time preference; growth; environmental quality; second-best fiscal policies;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2009. "The Environment and Directed Technical Change," NBER Working Papers 15451, National Bureau of Economic Research, Inc.
  2. Bovenberg, A Lans & Smulders, Sjak A, 1996. "Transitional Impacts of Environmental Policy in an Endogenous Growth Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 861-93, November.
  3. Rafaela Mª Pérez Sánchez & Jesús Ruiz Andújar, 2004. "Global and local indeterminacy and optimal environmental public policies in an economy with public abatement activities," Documentos de Trabajo del ICAE 0408, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
  4. Zeno Enders & Philip Jung & Gernot J. Müller, 2009. "Has the Euro changed the Business Cycle?," Bonn Econ Discussion Papers, University of Bonn, Germany bgse6_2009, University of Bonn, Germany.
  5. Alain Ayong Le Kama & Katheline Schubert, 2007. "A note on the consequences of an endogenous discounting depending on the environmental quality," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00206326, HAL.
  6. Smulders, J.A. & Gradus, R.H.J.M., 1993. "Pollution abatement and long-term growth," Discussion Paper, Tilburg University, Center for Economic Research 1993-73, Tilburg University, Center for Economic Research.
  7. Simone Valente, 2005. "Sustainable Development, Renewable Resources and Technological Progress," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 30(1), pages 115-125, January.
  8. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(5), pages S103-26, October.
  9. Bovenberg, A.L. & Mooij, R.A. de, 1997. "Environmental tax reforms and endogenous growth," Open Access publications from Tilburg University urn:nbn:nl:ui:12-74434, Tilburg University.
  10. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(2), pages 353-77, May.
  11. Agénor, Pierre-Richard, 2010. "A theory of infrastructure-led development," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 34(5), pages 932-950, May.
  12. JOUVET, Pierre-André & PESTIEAU, Pierre & PONTHIERE, Grégory, . "Longevity and environmental quality in an OLG model," CORE Discussion Papers RP -2377, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Balestra, Carlotta & DOTTORI, Davide, 2009. "Aging society, health and the environment," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2009037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. W. Viscusi & Joel Huber & Jason Bell, 2008. "Estimating discount rates for environmental quality from utility-based choice experiments," Journal of Risk and Uncertainty, Springer, Springer, vol. 37(2), pages 199-220, December.
  15. Epstein, Larry G., 1987. "A simple dynamic general equilibrium model," Journal of Economic Theory, Elsevier, Elsevier, vol. 41(1), pages 68-95, February.
  16. Dioikitopoulos, Evangelos V. & Kalyvitis, Sarantis, 2010. "Endogenous Time Preference And Public Policy: Growth And Fiscal Implications," Macroeconomic Dynamics, Cambridge University Press, Cambridge University Press, vol. 14(S2), pages 243-257, November.
  17. Futagami, Koichi & Morita, Yuichi & Shibata, Akihisa, 1993. " Dynamic Analysis of an Endogenous Growth Model with Public Capital," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 95(4), pages 607-25, December.
  18. George Economides & Apostolis Philippopoulos, 2008. "Growth enhancing policy is the means to sustain the environment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 207-219, January.
  19. repec:hal:journl:halshs-00206326 is not listed on IDEAS
  20. Ramirez, Donna Theresa J. & Khanna, Madhu & Zilberman, David, 2002. "Conservation Capital And Sustainable Economic Growth," 2002 Annual meeting, July 28-31, Long Beach, CA, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 19846, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  21. 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.
  22. Masako Ikefuji & Ryo Horii, 2007. "Wealth Heterogeneity and Escape from the Poverty-Environment Trap," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(6), pages 1041-1068, December.
  23. Hansen, Lars Peter & Singleton, Kenneth J, 1983. "Stochastic Consumption, Risk Aversion, and the Temporal Behavior of Asset Returns," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 91(2), pages 249-65, April.
  24. Stephanie Schmitt-Grohe & Martin Uribe, 2001. "Closing Small Open Economy Models," Departmental Working Papers, Rutgers University, Department of Economics 200115, Rutgers University, Department of Economics.
  25. Raymond Gradus & Sjak Smulders, 1993. "The trade-off between environmental care and long-term growth—Pollution in three prototype growth models," Journal of Economics, Springer, Springer, vol. 58(1), pages 25-51, February.
  26. Dimitrios Varvarigos, 2010. "Environmental Degradation, Longevity, and the Dynamics of Economic Development," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 46(1), pages 59-73, May.
  27. Fabien Prieur, 2009. "The environmental Kuznets curve in a world of irreversibility," Economic Theory, Springer, Springer, vol. 40(1), pages 57-90, July.
  28. Elbasha, Elamin H. & Roe, Terry L., 1996. "On Endogenous Growth: The Implications of Environmental Externalities," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 240-268, September.
  29. Bennett, R.L. & Farmer, R.E.A., 1999. "Indeterminacy with Non-Separable Utility," Economics Working Papers, European University Institute eco99/34, European University Institute.
  30. Ligthart, J.E. & Ploeg, F. van der, 1994. "Pollution, the cost of public funds and endogenous growth," Open Access publications from Tilburg University urn:nbn:nl:ui:12-376258, Tilburg University.
  31. Xavier Pautrel, 2012. "Pollution, Private Investment in Healthcare, and Environmental Policy," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 114(2), pages 334-357, 06.
  32. Obstfeld, Maurice, 1990. "Intertemporal dependence, impatience, and dynamics," Journal of Monetary Economics, Elsevier, Elsevier, vol. 26(1), pages 45-75, August.
  33. Kiminori Matsuyama, 1990. "Increasing Returns, Industrialization and Indeterminacy of Equilibrium," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  34. Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer, Springer, vol. 2(2), pages 157-183, August.
  35. Boldrin, Michele, 1992. "Dynamic externalities, multiple equilibria, and growth," Journal of Economic Theory, Elsevier, Elsevier, vol. 58(2), pages 198-218, December.
  36. Horag Choi & Nelson C. Mark & Donggyu Sul, 2007. "Endogenous Discounting, the World Saving Glut and the U.S. Current Account," NBER Working Papers 13571, National Bureau of Economic Research, Inc.
  37. Meng, Qinglai, 2006. "Impatience and equilibrium indeterminacy," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 30(12), pages 2671-2692, December.
  38. X. Pautrel, 2008. "Reconsidering the Impact of the Environment on Long-run Growth when Pollution Influences Health and Agents have a Finite-lifetime," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 40(1), pages 37-52, May.
  39. Dolmas, Jim, 1996. "Balanced-growth-consistent recursive utility," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 20(4), pages 657-680, April.
  40. Palivos, Theodore & Wang, Ping & Zhang, Jianbo, 1997. "On the Existence of Balanced Growth Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 205-24, February.
  41. Kijima, Masaaki & Nishide, Katsumasa & Ohyama, Atsuyuki, 2010. "Economic models for the environmental Kuznets curve: A survey," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 34(7), pages 1187-1201, July.
  42. Lines, Marji, 2005. "Intertemporal equilibrium dynamics with a pollution externality," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 56(3), pages 349-364, March.
  43. Rodrik, Dani, 1996. "Coordination failures and government policy: A model with applications to East Asia and Eastern Europe," Journal of International Economics, Elsevier, Elsevier, vol. 40(1-2), pages 1-22, February.
  44. Shouyong Shi, 1999. "Fashion and wealth accumulation," Economic Theory, Springer, Springer, vol. 14(2), pages 439-461.
  45. Takumi Haibara, 2009. "Environmental Funds, Public Abatement, and Welfare," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 44(2), pages 167-177, October.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:deg:conpap:c017_045. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michaela Rank).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.