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The Cost of Pollution on Longevity, Welfare and Economic Stability

Natacha Raffin () and Thomas Seegmuller ()
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Thomas Seegmuller: CNRS & EHESS, Centre de la Vieille Charité

Environmental & Resource Economics, 2017, vol. 68, issue 3, No 11, 683-704

Abstract: Abstract This paper presents an overlapping generations model where pollution, private and public health expenditures are all determinants of longevity. Public expenditures, financed through labour taxation, provide both public health and abatement. We study the role of these three components of longevity on welfare and economic stability. At the steady state, we show that an appropriate fiscal policy may enhance welfare. However, when pollution is heavily harmful for longevity, the economy might experience aggregate instability or endogenous cycles. Nonetheless, a fiscal policy, which raises the share of public spending devoted to health, may display stabilizing virtues and rule out cycles. This allows us to recommend the design of the public policy that may comply with the dynamic and welfare objectives.

Keywords: Longevity; Pollution; Welfare; Instability (search for similar items in EconPapers)
JEL-codes: J10 O40 Q56 C62 (search for similar items in EconPapers)
Date: 2017
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Working Paper: The Cost of Pollution on Longevity, Welfare and Economic Stability (2014) Downloads
Working Paper: The cost of pollution on longevity, welfare and economic stability (2014) Downloads
Working Paper: The Cost of Pollution on Longevity, Welfare and Economic Stability (2014) Downloads
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DOI: 10.1007/s10640-016-0041-3

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