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Environmental Policy and Growth in a Model with Endogenous Environmental Awareness

  • Karine Constant

    ()

    (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université)

  • Marion Davin

    ()

    (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université)

This paper examines the relationship between environmental policy and growth when green preferences are endogenously determined by education and pollution. The government can implement a tax on pollution and recycle the revenue in public pollution abatement and/or education subsidy (influencing green behaviors). When agent's preferences for the environment are highly sensitive to environmental damages, the economy can converge to a balanced growth path equilibrium with damped oscillations. Therefore, we identify two objectives that environmental policy seeks to address: remove oscillations, source of intergenerational inequalities, and enhance the long-term growth rate. We show that a tighter tax allows to achieve both objectives when the tax revenue is well allocated between education and direct environmental protection.

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Paper provided by HAL in its series Working Papers with number halshs-00964540.

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Date of creation: Mar 2014
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Handle: RePEc:hal:wpaper:halshs-00964540
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  1. Xavier Pautrel, 2011. "Abatement technology and the environment-growth nexus with education," Working Papers hal-00570312, HAL.
  2. Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer, vol. 2(2), pages 157-183, August.
  3. Fabio Mariani & Agustin Pérez-Barahona & Natacha Raffin, 2008. "Life expectancy and the environment," Documents de travail du Centre d'Economie de la Sorbonne v08048, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  4. Grimaud, André & Tournemaine, Frédéric, 2006. "Why can an environmental policy tax promote growth through the channel of education?," IDEI Working Papers 676, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Matthew Kotchen & Michael Moore, 2008. "Conservation: From Voluntary Restraint to a Voluntary Price Premium," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(2), pages 195-215, June.
  6. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-77, June.
  7. Riber, D.C. & Wilhelm, M.O., 1996. "Altruistic and Joy-of-Giving Motivations in Charitable Behavior," Papers 1-96-4, Pennsylvania State - Department of Economics.
  8. Seegmuller, Thomas & Verchere, Alban, 2004. "Pollution as a source of endogenous fluctuations and periodic welfare inequality in OLG economies," Economics Letters, Elsevier, vol. 84(3), pages 363-369, September.
  9. Pautrel, Xavier, 2012. "Environmental Policy, Education And Growth: A Reappraisal When Lifetime Is Finite," Macroeconomic Dynamics, Cambridge University Press, vol. 16(05), pages 661-685, November.
  10. Tetsuo Ono, 2003. "Environmental tax policy in a model of growth cycles," Economic Theory, Society for the Advancement of Economic Theory (SAET), vol. 22(1), pages 141-168, 08.
  11. Prieur, Fabien & Bréchet, Thierry, 2013. "Can Education Be Good For Both Growth And The Environment?," Macroeconomic Dynamics, Cambridge University Press, vol. 17(05), pages 1135-1157, July.
  12. Schumacher, Ingmar & Zou, Benteng, 2015. "Threshold preferences and the environment," Journal of Mathematical Economics, Elsevier, vol. 60(C), pages 17-27.
  13. Roland Menges & Carsten Schroeder & Stefan Traub, 2005. "Altruism, Warm Glow and the Willingness-to-Donate for Green Electricity: An Artefactual Field Experiment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 31(4), pages 431-458, 08.
  14. Raymond Gradus & Sjak Smulders, 1993. "The trade-off between environmental care and long-term growth—Pollution in three prototype growth models," Journal of Economics, Springer, vol. 58(1), pages 25-51, February.
  15. Tetsuo Ono, 2003. "Environmental Tax Policy and Long-Run Economic Growth," The Japanese Economic Review, Japanese Economic Association, vol. 54(2), pages 203-217.
  16. Blackburn, Keith & Cipriani, Giam Pietro, 2002. "A model of longevity, fertility and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(2), pages 187-204, February.
  17. Chiroleu-Assouline, Mireille & Fodha, Mouez, 2006. "Double dividend hypothesis, golden rule and welfare distribution," Journal of Environmental Economics and Management, Elsevier, vol. 51(3), pages 323-335, May.
  18. Junxi Zhang, 1999. "Environmental sustainability, nonlinear dynamics and chaos," Economic Theory, Society for the Advancement of Economic Theory (SAET), vol. 14(2), pages 489-500.
  19. repec:hal:journl:halshs-00089895 is not listed on IDEAS
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