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Growth enhancing policy is the means to sustain the environment

Author

Listed:
  • George Economides

    (Athens University of Economics and Busines)

  • Apostolis Philippopoulos

    (Athens University of Economics and Business)

Abstract

We study Ramsey second-best optimal policy in a general equilibrium model of growth with renewable natural resources. Natural resources are depleted by private economic activity, but they can also be maintained by public policy. The government uses distorting taxes to finance infrastructure services and cleanup policy. Policy instruments (the tax rates and the allocation of tax revenue between infrastructure and cleanup) are chosen by solving a Ramsey-type policy problem. The more the representative citizen cares about the environment, the more growth-enhancing policies a Ramsey government should choose. (Copyright: Elsevier)

Suggested Citation

  • George Economides & Apostolis Philippopoulos, 2008. "Growth enhancing policy is the means to sustain the environment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 207-219, January.
    • Handle: RePEc:red:issued:06-111
    DOI: 10.1016/j.red.2007.05.001
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    References listed on IDEAS

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    More about this item

    Keywords

    Second-best policy; Natural resources; Economic growth;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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