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The Role of Indirect Environmental Taxation in Endogenous Growth Model on Environmental Quality in Iran

Author

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  • Rostamzadeh, Parviz

    () (Assistant Professor of Economics, Shiraz University)

  • Nasirabadi, Shohreh

    () (M.A. in Economics, Shiraz University)

Abstract

The aim of this paper is study the role of indirect environmental taxation in endogenous growth model on environmental quality in Iran. For doing so, has used simulation of three section economic model and definition environmental quality function and the optimal level of variable in general equilibrium model determined and used a calibration method to studding the role of taxation on capital gains. The result showed that capital gain tax reduces consumption and capital. Increase capital gain tax rate increases government tax revenue and provide compensation of pollution, thus increasing the quality of environment. It should be note that the flow of capital is effective on change the quality of the environment. The results suggest that increase in capital in order to increase the environmental technologies is because it coincides with increase in the quality of the environment, decrease the capital. Therefore, the positive and negative effects of taxes should be considered with a comprehensive view in order not to reduce the quality of the environment and not create disorder in the economic system.

Suggested Citation

  • Rostamzadeh, Parviz & Nasirabadi, Shohreh, 2017. "The Role of Indirect Environmental Taxation in Endogenous Growth Model on Environmental Quality in Iran," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 4(3), pages 35-58, November.
  • Handle: RePEc:ris:qjatoe:0081
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    More about this item

    Keywords

    Capital gain tax; Environmental quality; General equilibrium model; Growth model;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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