IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v61y2015i3p297-318.html
   My bibliography  Save this article

Abatement Technology and the Environment–Growth Nexus with Education

Author

Listed:
  • Xavier Pautrel

Abstract

The present paper adopts a Yaari (Rev Econ Stud 32:137–150, 1965 ) and Blanchard (J Polit Econ 93(2):223–247, 1985 ) overlapping generations model with Lucas’s (J Monet Econ 22(1):3–42, 1988 ) human capital accumulation in order to examine how environmental taxation influences growth. It challenges conventional result that tighter environmental tax has either no long term effect at all, or has a positive long term effect. In the case of Cobb–Douglas production functions and logarithmic utilities, this paper demonstrates that the technology used in the abatement sector determines the existence and direction of the growth effect. In the case of output taxation, if the abatement sector is relatively more (respectively less) intensive in human capital than the final output sector, tighter environmental tax increases (resp. reduces) growth in the long term. This result always holds true for finite life expectancy but for infinite life expectancy it only holds true when the labour supply is endogenous. The transitional impact of tighter environmental policy is also investigated. We find that the magnitude of the short term effects of environmental taxation varies according to the technology used in the abatement and final output sectors, and that there is a reverse trade-off between the short and the long term effects. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Xavier Pautrel, 2015. "Abatement Technology and the Environment–Growth Nexus with Education," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(3), pages 297-318, July.
  • Handle: RePEc:kap:enreec:v:61:y:2015:i:3:p:297-318
    DOI: 10.1007/s10640-014-9793-9
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10640-014-9793-9
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s10640-014-9793-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. anonymous, 1995. "Does the bouncing ball lead to economic growth?," Regional Update, Federal Reserve Bank of Atlanta, issue Jul, pages 1-2,4-6.
    2. Cole, Matthew A. & Elliott, Robert J.R. & Shimamoto, Kenichi, 2006. "Globalization, firm-level characteristics and environmental management: A study of Japan," Ecological Economics, Elsevier, vol. 59(3), pages 312-323, September.
    3. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    4. Pautrel, Xavier, 2009. "Pollution and life expectancy: How environmental policy can promote growth," Ecological Economics, Elsevier, vol. 68(4), pages 1040-1051, February.
    5. X. Pautrel, 2008. "Reconsidering the Impact of the Environment on Long-run Growth when Pollution Influences Health and Agents have a Finite-lifetime," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(1), pages 37-52, May.
    6. Grimaud, Andre & Tournemaine, Frederic, 2007. "Why can an environmental policy tax promote growth through the channel of education?," Ecological Economics, Elsevier, vol. 62(1), pages 27-36, April.
    7. Casey B. Mulligan & Xavier Sala-i-Martin, 1993. "Transitional Dynamics in Two-Sector Models of Endogenous Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 739-773.
    8. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2011. "Polluters and Abaters," Annals of Economics and Statistics, GENES, issue 103-104, pages 9-24.
    9. Bovenberg, A. Lans & van Ewijk, Casper, 1997. "Progressive taxes, equity, and human capital accumulation in an endogenous growth model with overlapping generations," Journal of Public Economics, Elsevier, vol. 64(2), pages 153-179, May.
    10. Raymond Gradus & Sjak Smulders, 1993. "The trade-off between environmental care and long-term growth—Pollution in three prototype growth models," Journal of Economics, Springer, vol. 58(1), pages 25-51, February.
    11. Frank Hettich, 1998. "Growth effects of a revenue-neutral environmental tax reform," Journal of Economics, Springer, vol. 67(3), pages 287-316, October.
    12. Pautrel, Xavier, 2012. "Environmental Policy, Education And Growth: A Reappraisal When Lifetime Is Finite," Macroeconomic Dynamics, Cambridge University Press, vol. 16(5), pages 661-685, November.
    13. repec:adr:anecst:y:2011:i:103-104:p:02 is not listed on IDEAS
    14. Merton H. Miller & Franco Modigliani, 1961. "Dividend Policy, Growth, and the Valuation of Shares," The Journal of Business, University of Chicago Press, vol. 34, pages 411-411.
    15. Heijdra, Ben J., 2017. "Foundations of Modern Macroeconomics," OUP Catalogue, Oxford University Press, edition 3, number 9780198784135.
    16. Michael B. Devereux & David R. F. Love, 1994. "The Effects of Factor Taxation in a Two-Sector Model of Endogenous Growth," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 509-536, August.
    17. Xavier Pautrel, 2012. "Pollution, Private Investment in Healthcare, and Environmental Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(2), pages 334-357, June.
    18. Cole, Matthew A. & Elliott, Robert J.R. & Shimamoto, Kenichi, 2005. "Why the grass is not always greener: the competing effects of environmental regulations and factor intensities on US specialization," Ecological Economics, Elsevier, vol. 54(1), pages 95-109, July.
    19. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
    20. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834.
    21. Cole, Matthew A. & Elliott, Robert J.R. & Wu, Shanshan, 2008. "Industrial activity and the environment in China: An industry-level analysis," China Economic Review, Elsevier, vol. 19(3), pages 393-408, September.
    22. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Karine Constant & Marion Davin, 2014. "Environmental Policy and Growth in a Model with Endogenous Environmental Awareness," AMSE Working Papers 1405, Aix-Marseille School of Economics, France, revised Mar 2014.
    2. Le Coent, Philippe & Préget, Raphaële & Thoyer, Sophie, 2017. "Compensating Environmental Losses Versus Creating Environmental Gains: Implications for Biodiversity Offsets," Ecological Economics, Elsevier, vol. 142(C), pages 120-129.
    3. Constant, Karine & Davin, Marion, 2019. "Environmental Policy And Growth When Environmental Awareness Is Endogenous," Macroeconomic Dynamics, Cambridge University Press, vol. 23(3), pages 1102-1136, April.
    4. Lei Wen & Fei Yan, 2018. "Regional differences and influencing factors in the CO2 emissions of China’s power industry based on the panel data models considering power-consuming efficiency factor," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(5), pages 1987-2007, October.
    5. Xu, Bin & Lin, Boqiang, 2016. "Differences in regional emissions in China's transport sector: Determinants and reduction strategies," Energy, Elsevier, vol. 95(C), pages 459-470.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pautrel, Xavier, 2012. "Environmental Policy, Education And Growth: A Reappraisal When Lifetime Is Finite," Macroeconomic Dynamics, Cambridge University Press, vol. 16(5), pages 661-685, November.
    2. Hassan, Mahmoud & Oueslati, Walid & Rousselière, Damien, 2020. "Environmental taxes, reforms and economic growth: an empirical analysis of panel data," Economic Systems, Elsevier, vol. 44(3).
    3. Oueslati, Walid, 2015. "Growth and welfare effects of environmental tax reform and public spending policy," Economic Modelling, Elsevier, vol. 45(C), pages 1-13.
    4. Kirschbaum, Birgit & Soretz, Susanne, 2017. "Human capital, pollution control, and endogenous growth," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168186, Verein für Socialpolitik / German Economic Association.
    5. Basseti, Thomas & Benos, Nikos & Karagiannis, Stelios, 2010. "How policy can influence human capital accumulation and environment quality," MPRA Paper 21754, University Library of Munich, Germany.
    6. Carlo Carraro & Enrica De Cian & Massimo Tavoni, 2012. "Human Capital, Innovation, and Climate Policy: An Integrated Assessment," Working Papers 2012.18, Fondazione Eni Enrico Mattei.
    7. Aloi, Marta & Tournemaine, Frederic, 2011. "Growth effects of environmental policy when pollution affects health," Economic Modelling, Elsevier, vol. 28(4), pages 1683-1695, July.
    8. Yoshihiro Hamaguchi, 2021. "Environmental policy and social status preference for education in an Uzawa–Lucas model," Bulletin of Economic Research, Wiley Blackwell, vol. 73(3), pages 456-468, July.
    9. Carlo Carraro & Enrica De Cian & Massimo Tavoni, 2009. "Human capital formation and global warming mitigation: evidence from an integrated assessment model," Working Papers 2009_30, Department of Economics, University of Venice "Ca' Foscari".
    10. Smulders, Sjak & Gradus, Raymond, 1996. "Pollution abatement and long-term growth," European Journal of Political Economy, Elsevier, vol. 12(3), pages 505-532, November.
    11. Turnovsky, S., 2000. "Growth in an Open Economy: some Recent Developments," Papers 5, Warwick - Development Economics Research Centre.
    12. Xavier Pautrel, 2001. "Formation dans la production, capital humain, innovation et croissance," Economie & Prévision, La Documentation Française, vol. 0(4), pages 171-185.
    13. Hamaguchi, Yoshihiro, 2020. "Dynamic analysis of bribery firms’ environmental tax evasion in an emissions trading market," Journal of Macroeconomics, Elsevier, vol. 63(C).
    14. Chu, Hsun & Lai, Ching-chong & Liao, Chih-hsing, 2016. "A Note On Environment-Dependent Time Preferences," Macroeconomic Dynamics, Cambridge University Press, vol. 20(6), pages 1652-1667, September.
    15. Carlo Carraro & Enrica De Cian & Lea Nicita, 2009. "Modeling Biased Technical Change. Implications For Climate Policy," Working Papers 2009_27, Department of Economics, University of Venice "Ca' Foscari".
    16. Klarl, Torben, 2016. "Pollution externalities, endogenous health and the speed of convergence in an endogenous growth model," Journal of Macroeconomics, Elsevier, vol. 50(C), pages 98-113.
    17. Fullerton, Don & Kim, Seung-Rae, 2008. "Environmental investment and policy with distortionary taxes, and endogenous growth," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 141-154, September.
    18. Wei-Bin Zhang, 2015. "Oscillations in a Growth Model with Capital, Technology and Environment with Exogenous Shocks," Academicus International Scientific Journal, Entrepreneurship Training Center Albania, issue 12, pages 73-93, July.
    19. Marta Aloi & Frederic Tournemaine, 2013. "Inequality, growth, and environmental quality tradeoffs in a model with human capital accumulation," Canadian Journal of Economics, Canadian Economics Association, vol. 46(3), pages 1123-1155, August.
    20. Jhy-Yuan Shieh & Wen-Ya Chang & Ching-Chong Lai, 2007. "An Endogenous Growth Model Of Capital And Arms Accumulation," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(6), pages 557-575.

    More about this item

    Keywords

    Growth; Environment; Overlapping generations; Human capital; Abatement;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:61:y:2015:i:3:p:297-318. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.