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Environmental policy in a two sector endogenous growth model

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  • Hettich, Frank
  • Svane, Minna Selene
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    Abstract

    This paper analyses policy measures within a two sector endogenously growing economy with pollution. Pollution is either generated by production or by the use of physical capital in production, and can be reduced by public abatement activities. In this generalized Uzawa-Lucas model, the effects of fiscal policy are derived for all core variables and ratios. In addition, the optimal taxation rules are derived. If a pollution tax is not available it turns out that a first best solution may be reached by use of factor income taxation. Additionally, the effects and the possibility of environmental policy are complemented for a small open economy. --

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    Bibliographic Info

    Paper provided by University of Konstanz, Department of Economics in its series Discussion Papers, Series I with number 290.

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    Date of creation: 1998
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    Handle: RePEc:zbw:kondp1:290

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    Related research

    Keywords: endogenous growth; environmental externality; optimal taxation; international capital mobility;

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    References

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    1. Long, N.V. & Wong, K.Y., 1996. "Endogenous Growth and International Trade: A Survey," Discussion Papers in Economics at the University of Washington, Department of Economics at the University of Washington 96-07, Department of Economics at the University of Washington.
    2. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(3), pages 500-521, June.
    3. Frederick Ploeg & Cees Withagen, 1991. "Pollution control and the Ramsey problem," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 1(2), pages 215-236, June.
    4. Bovenberg, A.L. & Mooij, R.A. de, 1994. "Environmental tax reform and endogenous growth," Discussion Paper, Tilburg University, Center for Economic Research 1994-98, Tilburg University, Center for Economic Research.
    5. Smulders, J.A. & Gradus, R.H.J.M., 1996. "Pollution abatement and long-term growth," Open Access publications from Tilburg University urn:nbn:nl:ui:12-72815, Tilburg University.
    6. Smulders, J.A. & Gradus, R.H.J.M., 1993. "The trade-off between environmental care and long-term growth: Pollution in three proto-type growth models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153405, Tilburg University.
    7. Anne Brendemoen & Haakon Vennemo, 1994. "A Climate Treaty and the Norwegian Economy: A CGE Assessment," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 1), pages 77-93.
    8. Assaf Razin & Chi-Wa Yuen, 1995. "Capital Income Taxation and Long Run Growth: New Perspectives," NBER Working Papers 5028, National Bureau of Economic Research, Inc.
    9. King, Robert G & Rebelo, Sergio, 1990. "Public Policy and Economic Growth: Developing Neoclassical Implications," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(5), pages S126-50, October.
    10. Smulders, J.A., 1995. "Entropy, environment and endogenous economic growth," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153413, Tilburg University.
    11. Smulders, J.A., 1995. "Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153411, Tilburg University.
    12. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, Elsevier, vol. 22(1), pages 3-42, July.
    13. Willem H. Buiter & Kenneth M. Kletzer, 1995. "Capital Mobility, Fiscal Policy and Growth under Self-Financing of Human Capital Formation," NBER Working Papers 5120, National Bureau of Economic Research, Inc.
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    Cited by:
    1. Hettich, Frank, 2000. "The implications of international cooperation for economic growth, environmental quality and welfare," Wirtschaftswissenschaftliche Diskussionspapiere 08/2000, Ernst Moritz Arndt University of Greifswald, Faculty of Law and Economics.

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