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

  • Nguyen Than Dao
  • Ottmar Edenhofer

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.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4865.

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Date of creation: 2014
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Handle: RePEc:ces:ceswps:_4865
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  1. Xavier Pautrel, 2006. "Reconsidering The Impact of Environment on Long-Run Growth When Pollution Influences Health and Agents Have Finite-Lifetime," Working Papers 2006.93, Fondazione Eni Enrico Mattei.
  2. Mouez Fodha & Thomas Seegmuller, 2011. "Environmental quality, public debt and economic development," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00555625, HAL.
  3. 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.
  4. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
  5. Bhattacharya, Joydeep & Qiao, Xue, 2005. "Public and Private Expenditures on Health in a Growth Model," Staff General Research Papers 12378, Iowa State University, Department of Economics.
  6. Cuong Le Van & Katheline Schubert & Tu-Anh Nguyen, 2007. "With exhaustible resources, can a developing country escape from the poverty trap ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00203180, HAL.
  7. Goenka, A. & Jafarey, S. & Pouliot, W., 2012. "Pollution, mortality and optimal environmental policy," Working Papers 12/07, Department of Economics, City University London.
  8. Natacha Raffin & Thomas Seegmuller, 2012. "Longevity, pollution and growth," AMSE Working Papers 1230, Aix-Marseille School of Economics, Marseille, France.
  9. repec:hal:journl:halshs-00470655 is not listed on IDEAS
  10. repec:cup:cbooks:9780521001151 is not listed on IDEAS
  11. Theodore Palivos & Dimitrios varvarigos, 2010. "Pollution Abatement as a Source of Stabilisation and Long-Run Growth," Discussion Paper Series 2010_13, Department of Economics, University of Macedonia, revised Sep 2010.
  12. Bovenberg, A.L. & Smulders, J.A., 1995. "Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model," Other publications TiSEM 6784bb12-71fb-45a5-bf7e-8, Tilburg University, School of Economics and Management.
  13. Sjak Smulders, 1995. "Entropy, environment, and endogenous economic growth," International Tax and Public Finance, Springer, vol. 2(2), pages 319-340, August.
  14. Cuong Le Van & Katheline Schubert & Tu-Anh Nguyen, 2010. "With Exhaustible Resources, Can A Developing Country Escape From The Poverty Trap?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00976399, HAL.
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