A Real-Business-Cycle model with pollution and environmental taxation: the case of Bulgaria

Aleksandar Vasilev

Bulgarian Economic Papers from Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski

Abstract: We introduce an environmental dimension into a real-business-cycle model augmented with a detailed government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2016). We investigate the quantitative importance of utility-enhancing environmental quality, and the mechanics of environmental ("carbon") tax on polluting production, as well as the effect of government spending on pollution abatement over the cycle. In particular, a positive shock to pollution emission in the model works like a positive technological shock, but its effect is quantitatively very small. Allowing for pollution as a by-product of production improves the model performance against data, and in addition this ex- tended setup dominates the standard RBC model framework, e.g., Vasilev (2009).

Keywords: Business cycles; pollution; environmental quality; environmental tax; abatement spending (search for similar items in EconPapers)
JEL-codes: C68 E32 Q2 Q4 Q54 Q58 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2018-03, Revised 2018-03
New Economics Papers: this item is included in nep-dge, nep-ene, nep-env, nep-mac and nep-tra
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: A real-business-cycle model with pollution and environmental taxation: the case of Bulgaria (2018)
Journal Article: A Real-Business-Cycle model with pollution and environmental taxation: the case of Bulgaria (2018)
Working Paper: A Real-Business-Cycle model with pollution and environmental taxation: the case of Bulgaria (2018)
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