EconPapers    
Economics at your fingertips  
 

Pollution, mortality and time consistent abatement taxes

Aditya Goenka (), Saqib Jafarey and William Pouliot

Journal of Mathematical Economics, 2020, vol. 88, issue C, 1-15

Abstract: We study dynamically consistent policy in a neoclassical overlapping generations growth model where pollution externalities undermine health but are mitigated via tax-financed abatement. With arbitrarily constant taxation, two steady states arise: an unstable ‘poverty trap’ and a ‘neoclassical’ steady state near which the dynamics might either be monotonically convergent or oscillating. When the planner chooses a time consistent abatement path that maximizes a weighted intergenerational sum of expected utility, the optimal tax is zero at low levels of capital and then a weakly increasing function of the capital stock. The non-homogeneity of the tax function along with its feedback effect on savings induces additional steady states, stability reversals and oscillations.

Keywords: Time consistency; Pollution; Mortality; Overlapping generations model; Endogenous fluctuations; Optimal environmental policy (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304406820300136
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Pollution, Mortality and Time Consistent Abatement Taxes (2019) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:88:y:2020:i:c:p:1-15

DOI: 10.1016/j.jmateco.2020.01.004

Access Statistics for this article

Journal of Mathematical Economics is currently edited by Atsushi (A.) Kajii

More articles in Journal of Mathematical Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2021-10-15
Handle: RePEc:eee:mateco:v:88:y:2020:i:c:p:1-15