ENVIRONMENTAL POLLUTION, INFORMAL SECTOR, PUBLIC EXPENDITURE AND ECONOMIC GROWTH

Manash Gupta () and Trishita Ray Barman

Hitotsubashi Journal of Economics, 2015, vol. 56, issue 1, 73-91

Abstract: The impact of environmental pollution on productivity is analyzed in a dynamic two commodity model consisting of a formal sector and an informal sector. Environmental quality and public infrastructural expenditure affect productivity of private inputs in both sectors. Both the sectors pollute environment and receive the benefits of public expenditure on abatement and infrastructure but the burden of tax is imposed only on the formal sector. Properties of the steady-state growth equilibrium and of the second-best optimum fiscal policy are analyzed. The socially optimal relative size of the informal sector is less than its second-best optimal relative size in the decentralized competitive equilibrium.

Keywords: endogenous growth; informal sector; public expenditure; environmental pollution; abatement expenditure (search for similar items in EconPapers)
JEL-codes: H2 H4 O4 Q5 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/27193/HJeco0560100730.pdf

Related works:
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:hit:hitjec:v:56:y:2015:i:1:p:73-91

DOI: 10.15057/27193

Access Statistics for this article

More articles in Hitotsubashi Journal of Economics from Hitotsubashi University Contact information at EDIRC.
Bibliographic data for series maintained by Digital Resources Section, Hitotsubashi University Library ().