Environmental Policy and Capital Movements: The Role of Government Commitment
This Paper explores the relationship between environmental protection and international capital movements, when tax policy is endogenous (through voting). A two-period general equilibrium model of a small open economy is specified to compare the effects of two different constitutions (commitment or no commitment in tax policy), as well as income inequality. Under the commitment regime, the equilibrium is characterized by a lower labour tax, higher environmental tax and less capital moving abroad than in the no-commitment equilibrium. Furthermore, given the degree of commitment, more equal societies are characterized by tougher environmental policy and less capital moving abroad.
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- Marsiliani, L. & Renstrom, T.I., 2000. "Inequality, Environmental Protection and Growth," Discussion Paper 2000-34, Tilburg University, Center for Economic Research.
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Other publications TiSEM
31842095-d9e5-4693-ab81-4, Tilburg University, School of Economics and Management.
- Marsiliani, Laura & Renstrom, Thomas I, 2000. "Time Inconsistency in Environmental Policy: Tax Earmarking as a Commitment Solution," Economic Journal, Royal Economic Society, vol. 110(462), pages C123-38, March.
- de Bovenberg, A Lans & Mooij, Ruud A, 1994.
"Environmental Levies and Distortionary Taxation,"
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American Economic Association, vol. 84(4), pages 1085-89, September.
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