Growth enhancing policy is the means to sustain the environment

George Economides and Apostolis Philippopoulos ()

Review of Economic Dynamics, 2008, vol. 11, issue 1, 207-219

Abstract: We study Ramsey second-best optimal policy in a general equilibrium model of growth with renewable natural resources. Natural resources are depleted by private economic activity, but they can also be maintained by public policy. The government uses distorting taxes to finance infrastructure services and cleanup policy. Policy instruments (the tax rates and the allocation of tax revenue between infrastructure and cleanup) are chosen by solving a Ramsey-type policy problem. The more the representative citizen cares about the environment, the more growth-enhancing policies a Ramsey government should choose. (Copyright: Elsevier)

Keywords: Second-best policy; Natural resources; Economic growth (search for similar items in EconPapers)
JEL-codes: H23 O13 Q2 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (65)

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DOI: 10.1016/j.red.2007.05.001

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