Growth and welfare effects of environmental tax reform and public spending policy

Walid Oueslati

Economic Modelling, 2015, vol. 45, issue C, 1-13

Abstract: This paper considers the implications of environmental tax reform and public spending policy for growth and welfare. Using a two-sector endogenous growth model where the interactions between health, education, and the environment are taken into account, we show that revenue-positive tax reforms combined with a change in the public spending structure may improve long-run growth and welfare. However, this outcome incurs relatively high welfare cost during the transition phase. This is particularly the case when the spending policy favors education spending.

Keywords: Tax reform; Endogenous growth; Human capital; Pollution; Health; Transitional dynamics; Welfare cost (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:45:y:2015:i:c:p:1-13

DOI: 10.1016/j.econmod.2014.10.040

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