A NOTE ON ENVIRONMENT-DEPENDENT TIME PREFERENCES

Hsun Chu, Ching-chong Lai and Chih-Hsing Liao

Macroeconomic Dynamics, 2016, vol. 20, issue 6, 1652-1667

Abstract: In this paper we investigate the growth effect of environmental taxes when time preference is endogenously determined by environmental quality. We find that if people become more patient because of a cleaner environment, raising the environmental tax may reduce pollution and stimulate growth. Moreover, the Pigouvian principle may be inefficient in the presence of endogenous time preference.

Date: 2016
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Working Paper: A Note on Environment-dependent Time Preferences (2014)
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