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A Note on Environmental Policy and Public Debt Stabilization

Author

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  • Mouez Fodha

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

  • Thomas Seegmuller

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

Abstract

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.

Suggested Citation

  • Mouez Fodha & Thomas Seegmuller, 2012. "A Note on Environmental Policy and Public Debt Stabilization," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01308390, HAL.
  • 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
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    Cited by:

    1. repec:leo:wpaper:1824 is not listed on IDEAS
    2. Mouez Fodha & Thomas Seegmuller, 2014. "Environmental Quality, Public Debt and Economic Development," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(4), pages 487-504, April.
    3. Mouez Fodha & Thomas Seegmuller & Hiroaki Yamagami, 2014. "Environmental Policies under Debt Constraint," AMSE Working Papers 1431, Aix-Marseille School of Economics, Marseille, France, revised Jun 2014.
    4. repec:hal:wpaper:halshs-00555625 is not listed on IDEAS

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