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Environmental Policies under Debt Constraint

Listed author(s):
  • Mouez Fodha

    ()

    (University Paris 1 and Paris School of Economics. Maison des Sciences Economiques)

  • Thomas Seegmuller

    ()

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

  • Hiroaki Yamagami

    ()

    (Seikei University, Tokyo)

This article analyzes the consequences of environmental tax policies when the government imposes a constraint on stabilizing public debt. A public sector of pollution abatement is financed by taxation and by issuing public debt. Considering a simple overlapping-generations model, the tax reform stimulates steady-state investment. Then, the environmental quality and the aggregate consumption increase if and only if (i) pollution abatement is large enough and (ii) there is under-accumulation of the per capita capital stock. This arises if environmental taxation allows a decrease of either income taxation or debt-output ratio.

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File URL: http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2014_-_nr_31.pdf#overlay-context=fr/recherche/documents-de-travail/environmental-policies-under-debt-constraint
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Paper provided by Aix-Marseille School of Economics, Marseille, France in its series AMSE Working Papers with number 1431.

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Length: 22 pages
Date of creation: Jun 2014
Date of revision: Jun 2014
Handle: RePEc:aim:wpaimx:1431
Contact details of provider: Web page: http://www.amse-aixmarseille.fr/en

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