Environmental Policy and Public Debt Stabilization
AbstractThis article analyzes the consequences of environmental tax policy under public debt stabilization constraint. A public sector of pollution abatement is financed by a tax on pollutant emissions and/or by public debt. In the same time, households can also invest in private pollution abatement activities. We show that the economy may be characterized by an environmental-poverty trap if debt is too large or public abatement is not sufficiently efficient with respect to the private one. However, there exists a level of public abatement and debt for a stable steady state to be optimal.
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Date of creation: 31 Aug 2010
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Environmental taxation; public and private abatements; public debt; trap; optimality.;
Other versions of this item:
- Mouez Fohda & Thomas Seegmuller, 2010. "Environmental Policy and Public Debt Stabilization," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00512789, HAL.
- NEP-ALL-2010-11-06 (All new papers)
- NEP-ENV-2010-11-06 (Environmental Economics)
- NEP-RES-2010-11-06 (Resource Economics)
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