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Are the Laffer curve and the Green Paradox mutually exclusive?

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  • Stefano Bosi
  • David Desmarchelier

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

To study the relationship between a Laffer Curve and the Green Paradox, we consider a Ramsey model with endogenous labor supply, where pollution increases the consumption demand (compensation effect). In the long run, the conditions for a Laffer curve and the Green Paradox are mutually exclusive: the curve exists under a weak compensation effect while the paradox under a strong effect. In the short run, limit cycles arise only if a Laffer curve exists but never occur in the case of Green Paradox.

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  • Stefano Bosi & David Desmarchelier, 2016. "Are the Laffer curve and the Green Paradox mutually exclusive?," Working Papers hal-04141602, HAL.
    • Handle: RePEc:hal:wpaper:hal-04141602
    Note: View the original document on HAL open archive server: https://hal.science/hal-04141602
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    References listed on IDEAS

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