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Environmental regulation and economic cycles

Author

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  • George, Halkos E.
  • George, Papageorgiou J.
  • Emmanuel, Halkos G.
  • John, Papageorgiou G.

Abstract

This paper examines economic cycles that do not depend on exogenous economic actions. More precisely, the paper develops a positive model of government behavior in order to define the intertemporal fiscal policies that are optimal for a country and which, determine both the optimal budget level and the optimal level of environmental quality. For this purpose, we establish an optimal control model involving intertemporal subsidy strategies characteristically used by an authoritarian government similar to those found in central Europe. It will be shown that by applying the Hopf bifurcation theorem,a cyclical strategy – that is, waves of regulation, environmental subsidies alternating with deregulation and cuts in social programs – may represent an optimal policy.

Suggested Citation

  • George, Halkos E. & George, Papageorgiou J. & Emmanuel, Halkos G. & John, Papageorgiou G., 2019. "Environmental regulation and economic cycles," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 172-177.
    • Handle: RePEc:eee:ecanpo:v:64:y:2019:i:c:p:172-177
    DOI: 10.1016/j.eap.2019.07.005
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    References listed on IDEAS

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    1. Engelbert Dockner & Gustav Feichtinger, 1991. "On the optimality of limit cycles in dynamic economic systems," Journal of Economics, Springer, vol. 53(1), pages 31-50, February.
    2. repec:hal:pseose:halshs-00555625 is not listed on IDEAS
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    5. Semmler, Willi & Sieveking, Malte, 2000. "Critical debt and debt dynamics," Journal of Economic Dynamics and Control, Elsevier, vol. 24(5-7), pages 1121-1144, June.
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    8. George E. Halkos & Epameinondas A. Paizanos, 2017. "The channels of the effect of government expenditure on the environment: evidence using dynamic panel data," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 60(1), pages 135-157, January.
    9. Halkos, George E. & Papageorgiou, George J., 2018. "Pollution, environmental taxes and public debt: A game theory setup," Economic Analysis and Policy, Elsevier, vol. 58(C), pages 111-120.
    10. Alfred Greiner & Bettina Fincke, 2009. "Public Debt and Economic Growth," Dynamic Modeling and Econometrics in Economics and Finance, Springer, number 978-3-642-01745-2, June.
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    15. George Halkos, 1994. "Optimal abatement of sulphur emissions in Europe," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(2), pages 127-150, April.
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    Cited by:

    1. Yu Zhang & Jie Wang & Jiakai Chen & Weizhong Liu, 2023. "Does environmental regulation policy help improve business performance of manufacturing enterprises? evidence from China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(5), pages 4335-4364, May.
    2. Jongeneel, Roel & Gonzalez-Martinez, Ana Rosa, 2022. "The role of market drivers in explaining the EU milk supply after the milk quota abolition," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 194-209.
    3. Halkos, George E. & Papageorgiou, George J. & Halkos, Emmanuel G. & Papageorgiou, John G., 2020. "Public debt games with corruption and tax evasion," Economic Analysis and Policy, Elsevier, vol. 66(C), pages 250-261.

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    More about this item

    Keywords

    Budget; Environmental resources; Subsidies; Hopf bifurcation; Optimal control;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics

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