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A Note on Environmental Policy and Public Debt Stabilization

Listed author(s):
  • Mouez Fodha

    ()

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

  • Thomas Seegmuller

    ()

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique - ECM - Ecole Centrale de Marseille)

This article analyzes the consequences of environmental tax policy under public debt stabilization constraint. A public sector of pollution abatement is financed by a tax on pollutant emissions and/or by public debt. At the same time, households can also invest in private pollution abatement activities. We show that the economy may be characterized by an environmental-poverty trap if debt is too large or public abatement is not sufficiently efficient with respect to the private one. However, there exists a level of public abatement and debt at which a stable steady state is optimal.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-01308390.

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Date of creation: Jun 2012
Publication status: Published in Macroeconomic Dynamics, Cambridge University Press (CUP), 2012, 16 (3), pp.477-492. 〈10.1017/S1365100510000672 〉
Handle: RePEc:hal:cesptp:hal-01308390
DOI: 10.1017/S1365100510000672
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01308390
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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