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

Phu Nguyen-Van and Thi Kim Cuong Pham ()

No 29, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

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.

Keywords: Endogenous policy; endogenous growth; environmental quality; status-seeking; public expenditure; Wagner’s law (search for similar items in EconPapers)
JEL-codes: H31 O41 Q58 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2008-09
New Economics Papers: this item is included in nep-env and nep-pub
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Endogenous fiscal policies, environmental quality, and status-seeking behavior (2013)
Working Paper: Endogenous fiscal policies, environmental quality, and status-seeking behavior (2013)
Working Paper: Endogenous Fiscal Policies, Environmental Quality, and Status-Seeking Behavior (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:dpc:wpaper:2908

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