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Environmental Policy and Growth in a Model with Endogenous Environmental Awareness

Author

Listed:
  • Karine Constant

    (Aix- Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)

  • Marion Davin

    (Aix- Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)

Abstract

This paper examines the relationship between environmental policy and growth when green preferences are endogenously determined by education and pollution. The government can implement a tax on pollution and recycle the revenue in public pollution abatement and/or education subsidy (influencing green behaviors). When agent’s preferences for the environment are highly sensitive to environmental damages, the economy can converge to a balanced growth path equilibrium with damped oscillations. Therefore, we identify two objectives that environmental policy seeks to address: remove oscillations, source of intergenerational inequalities, and enhance the long-term growth rate. We show that a tighter tax allows to achieve both objectives when the tax revenue is well allocated between education and direct environmental protection.

Suggested Citation

  • 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.
    • Handle: RePEc:aim:wpaimx:1405
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    References listed on IDEAS

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    More about this item

    Keywords

    environmental policy; endogenous growth; environmental wareness; Education;
    All these keywords.

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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