Environmental Policy and Growth in a Model with Endogenous Environmental Awareness

Karine Constant and Marion Davin ()

Working Papers from HAL

Abstract: 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.

Keywords: environmental policy; endogenous growth; environmental awareness; education (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-ene, nep-env, nep-ger and nep-res
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00964540v1
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Citations: View citations in EconPapers (1)

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Working Paper: Environmental Policy and Growth in a Model with Endogenous Environmental Awareness (2014)
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