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Double dividend hypothesis, golden rule and welfare distribution

  • Chiroleu-Assouline, Mireille
  • Fodha, Mouez

This paper analyzes the double dividend issues within the framework of overlapping generations models. We characterize the necessary conditions for obtaining a double dividend, i.e. an improvement of environmental and non-environmental welfare when the revenue from the pollution tax is recycled into a change in the labor tax rate. We show that, depending on the initial capital stock and on the intertemporal elasticity of substitution, conditions may be defined to simultaneously allow (i) the obtaining of a long term double dividend, (ii) the economy to move closer to the modified golden rule and (iii) in the short term, an improvement in the welfare of the two present generations.

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Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 51 (2006)
Issue (Month): 3 (May)
Pages: 323-335

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Handle: RePEc:eee:jeeman:v:51:y:2006:i:3:p:323-335
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622870

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  1. van der Ploeg, F. & Bovenberg, A.L., 1994. "Environmental policy, public goods, and the marginal cost of public funds," Other publications TiSEM 84be6810-e643-436b-95b0-0, Tilburg University, School of Economics and Management.
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  7. Bovenberg, A. Lans & Heijdra, Ben J., 1998. "Environmental tax policy and intergenerational distribution," Journal of Public Economics, Elsevier, vol. 67(1), pages 1-24, January.
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  9. Bovenberg, A.L. & de Mooij, R.A., 1997. "Environmental tax reforms and endogenous growth," Other publications TiSEM 87a3194a-0d1c-4e5b-83df-6, Tilburg University, School of Economics and Management.
  10. S. Proost & D. Regemorter, 1995. "The double dividend and the role of inequality aversion and macroeconomic regimes," International Tax and Public Finance, Springer, vol. 2(2), pages 207-219, August.
  11. Lans Bovenberg, A. & de Mooij, Ruud A., 1994. "Environmental taxes and labor-market distortions," European Journal of Political Economy, Elsevier, vol. 10(4), pages 655-683, December.
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