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Environmental Policy and Growthwhen Environmental Awarenessis Endogenous

Karine Constant and Marion Davin (marion.davin@umontpellier.fr)

Working Papers from LAMETA, Universtiy of Montpellier

Abstract: This paper examines the relationship between environmental policy and growth whengreen preferences are endogenously determined by education and pollution. We consideran environmental policy in which the government implements a tax on pollution andrecycles the revenue to fund pollution abatement activities and/or an education subsidy(influencing green behaviors). When the sensitivity of agents’ environmental preferencesto pollution and human capital is high, the economy can converge to a balanced growthpath equilibrium with damped oscillations. We show that this environmental policy canboth remove the oscillations, associated with intergenerational inequalities, and enhancethe long-term growth rate. However, this solution requires that the revenue from the taxrate must be allocated to education and direct environmental protection simultaneously.We demonstrate that this type of mixed-instrument environment policy is an effectiveway to address environmental and economic issues in both the short and the long run

Pages: 35 pages
Date: 2016-08
New Economics Papers: this item is included in nep-ene, nep-env and nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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http://www.lameta.univ-montp1.fr/Documents/DR2016-08.pdf Revised version, 07-2016 (application/pdf)
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Related works:
Journal Article: ENVIRONMENTAL POLICY AND GROWTH WHEN ENVIRONMENTAL AWARENESS IS ENDOGENOUS (2019) Downloads
Working Paper: Environmental Policy and Growth when Environmental Awareness is Endogenous (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:lam:wpaper:16-08

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