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Endogenous Fiscal Policies, Environmental Quality, and Status-Seeking Behavior

Author

Listed:
  • Phu Nguyen-Van

    (THEMA-CNRS, Université de Cergy-Pontoise, France)

  • Thi Kim Cuong Pham

    (BETA, Université de Strasbourg)

Abstract

This paper analyzes endogenous ï¬ scal policy and public decision in an endogenous growth model where agents care about social status and environmental quality. The quest for a higher status is assimilated to a preference for capital wealth. The government uses income tax to ï¬ nance infrastructure and environmental protection, and maximizes individual welfare. We ï¬ nd that accounting for preferences for social status and environmental quality may lead to an allocation of tax revenue in favor of cleanup effort to the detriment of infrastructure. It does not necessary have a negative impact on growth. Status seeking can however harm economic growth and environmental quality when its motive is important enough. Finally, we show that economic growth is consistent with environmental preservation but is not necessarily welfare-improving as in the case of absence of status-seeking behavior.

Suggested Citation

  • Phu Nguyen-Van & Thi Kim Cuong Pham, 2008. "Endogenous Fiscal Policies, Environmental Quality, and Status-Seeking Behavior," Working Papers 47, Development and Policies Research Center (DEPOCEN), Vietnam.
    • Handle: RePEc:dpc:wpaper:2908
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    Cited by:

    1. Thi Kim Cuong Pham, 2019. "Keeping up with or running away from the Joneses: the Barro model revisited," Journal of Economics, Springer, vol. 126(2), pages 179-192, March.
    2. Ilaski Barañano & Marta San Martín, 2015. "The Impact of Foreign Aid Linked to Infrastructure and Pollution Abatement," Review of International Economics, Wiley Blackwell, vol. 23(4), pages 667-686, September.
    3. Zhou, Sophie Lian, "undated". "Going Green for Esteem: An Extended Uzawa-Lucas Model with Status Driven Environmentalism," Discussion Papers 206560, University of Bonn, Institute for Food and Resource Economics.
    4. repec:ehu:ikerla:11751 is not listed on IDEAS
    5. Chaudhry, Azam & Tanveer, Hafsa & Naz, R., 2017. "Unique and multiple equilibria in a macroeconomic model with environmental quality: An analysis of local stability," Economic Modelling, Elsevier, vol. 63(C), pages 206-214.
    6. Bhattacharyya, Chandril & Ranjan Gupta, Manash, 2021. "Unionised labour market, environment and endogenous growth," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 29-44.
    7. Thi Kim Cuong Pham & Phu Nguyen Van & Thanh Tam Nguyen-Huu & Thi Anh-Dao Tran & Kone Noukignon, 2019. "Subjective Well-Being and Social Comparison: A Comparative Study on Rural Thailand and Vietnam," Revue d'économie politique, Dalloz, vol. 129(6), pages 993-1029.
    8. Yoshihiro Hamaguchi, 2021. "Environmental policy and social status preference for education in an Uzawa–Lucas model," Bulletin of Economic Research, Wiley Blackwell, vol. 73(3), pages 456-468, July.

    More about this item

    Keywords

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    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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