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On the Fiscal Strategies of Escaping Poverty-Environment Traps (and) Towards Sustainable Growth

Author

Listed:
  • Nguyen Than Dao
  • Ottmar Edenhofer

Abstract

An economy with clean and dirty intermediate inputs may fall into a trap characterized by low environmental quality and low life expectancy, while the others converge to opposite steady states. We propose new strategies towards sustainable growth. They include: (i) taxes (subsidies) imposed on the production of intermediate inputs to improve environmental quality, and therefore, life expectancy and capital accumulation, in order to guarantee that an economy locked in a poverty-environment trap can escape the stagnation; (ii) taxes (subsidies) imposed on the production of intermediate inputs, consumption, and capital income in order to decentralize the transition to the social optimum.

Suggested Citation

  • Nguyen Than Dao & Ottmar Edenhofer, 2014. "On the Fiscal Strategies of Escaping Poverty-Environment Traps (and) Towards Sustainable Growth," CESifo Working Paper Series 4865, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4865
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    References listed on IDEAS

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    1. Mariani, Fabio & Pérez-Barahona, Agustín & Raffin, Natacha, 2010. "Life expectancy and the environment," Journal of Economic Dynamics and Control, Elsevier, vol. 34(4), pages 798-815, April.
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    14. repec:hal:journl:halshs-00470655 is not listed on IDEAS
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    More about this item

    Keywords

    overlapping generations economy; poverty-environment trap; intermediate sectors; final good sectors; fiscal policy;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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