Environmental Policy and Capital Movements: The Role of Government Commitment
AbstractThis paper explores the relationship between environmental protection and international capital movements, when tax policy is endogenous (through voting). A two-period general equilibrium model of a small open economy is specified to compare the effects of two different constitutions (commitment or no commitment in tax policy), as well as income inequality. Under the commitment regime, the equilibrium is characterised by a lower labour tax, higher environmental tax and less capital moving abroad than in the no-commitment equilibrium. Furthermore, given the degree of commitment, more equal societies are characterised by tougher environmental policy and less capital moving abroad.
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Bibliographic InfoPaper provided by University of Rochester - Wallis Institute of Political Economy in its series Wallis Working Papers with number WP31.
Date of creation: Oct 2002
Date of revision:
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Postal: University of Rochester, Wallis Institute, Harkness 109B Rochester, New York 14627 U.S.A.
Environmental policy; international capital movements; time consistency; inequality; political economy; human capital;
Find related papers by JEL classification:
- F20 - International Economics - - International Factor Movements and International Business - - - General
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-AGR-2002-12-17 (Agricultural Economics)
- NEP-ALL-2002-11-18 (All new papers)
- NEP-NET-2002-11-18 (Network Economics)
- NEP-PBE-2002-11-18 (Public Economics)
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.:
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"Environmental Levies and Distortionary Taxation,"
American Economic Review,
American Economic Association, vol. 84(4), pages 1085-89, September.
- Marsiliani, L. & Renstrom, T.I., 2000. "Inequality, Environmental Protection and Growth," Discussion Paper 2000-34, Tilburg University, Center for Economic Research.
- Marsiliani, Laura & Renstrom, Thomas I, 2000. "Time Inconsistency in Environmental Policy: Tax Earmarking as a Commitment Solution," Economic Journal, Royal Economic Society, vol. 110(462), pages C123-38, March.
- Bovenberg, A.L. & Ploeg, F. van der, 1994.
"Green policies in a small open economy,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-152986, Tilburg University.
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- Bovenberg, A Lans & van der Ploeg, Frederick, 1994. " Green Policies and Public Finance in a Small Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(3), pages 343-63.
- Persson, Torsten & Tabellini, Guido, 1994. "Representative democracy and capital taxation," Journal of Public Economics, Elsevier, vol. 55(1), pages 53-70, September.
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