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Welfare-reducing growth despite individual and government optimization

  • Siang Ng

    ()

    (Department of Economics, Monash University, Clayton, Australia 3168)

  • Yew-Kwang Ng

    ()

    (Department of Economics, Monash University, Clayton, Australia 3168)

In the presence of substantial relative-income effects and environmental disruption effects, economic growth may be welfare-reducing even if each and all individuals are optimizing and eagerly trying to make more money and the government also maximizes the welfare of individuals by the choice of income-tax rate and the ratio devoted to the abatement of environmental disruption. Welfare-reducing growth may be avoided if environmental disruption may be directed taxed at low costs and/or government spending on public goods is not environmentally disruptive.

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Article provided by Springer in its journal Social Choice and Welfare.

Volume (Year): 18 (2001)
Issue (Month): 3 ()
Pages: 497-506

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Handle: RePEc:spr:sochwe:v:18:y:2001:i:3:p:497-506
Note: Received: 2 September 1998/Accepted: 16 February 2000
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