Dynamic Laffer Curve in an Endogenous Growth Model with Pollution

Esther Fernández, Mesferna@ccee.ucm.es, Rafaela Perez and Jesus Ruiz
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Mesferna@ccee.ucm.es: Departamento de Análisis Económico y Economía Cuantitativa. Universidad Complutense de Madrid., https://www.ucm.es/fundamentos-analisis-economico2/fernandez-casillas,-m%C2%AA-esther

Documentos de Trabajo del ICAE from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico

Abstract: This paper discusses the effects of a green tax reform in an AsK growth model without abatement activities and with a negative environmental externality in utility function. There is also a non-optimal level of public spending. The results depend on the financing source of public spending. When there is not public debt, a revenue-neutral green tax reform has not any effect on pollution, growth and welfare. On the contrary, when short-run deficits are financed by debt issuing, a variety of green tax reforms increase welfare. Nevertheless, in this framework, non-green tax reforms are also welfare improving.

Pages: pages 18
Date: 2002
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