 Economic Growth, Environmental Damage and Sustainable TaxationChapter 2 in Endogenous Growth, Market Failures and Economic Policy, 1999, pp 19-28 from Palgrave Macmillan Abstract: Abstract This chapter describes the fallacy and the dynamics of an ecological constraint in a Ramsey economy. It is based on the Solow-Ramsey-Cass-Koopmans model of exogenous growth, with the extension of an environmental constraint. The model describes the theoretical problems that one encounters with a scarce and nonrenewable resource. As this already changes results in a converging environment, the effect would be even larger in a model of long-run growth. Four different settings are examined, with finite and infinite population, an infinity of atomistic firms operating under decreasing returns to scale, and a finite number of firms with constant or increasing returns to scale. I show how policy can prevent society from an ecological collapse, but only a second-best policy can assure this. Contrary to common belief, I find that government expenditure for environmental care is far more important than ecological taxes and trading of pollution certificates. Keywords: Capital Stock; Fiscal Policy; Environmental Damage; Competitive Equilibrium; Social Optimum (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-27129-0_2 Ordering information: This item can be ordered from DOI: 10.1007/978-1-349-27129-0_2 Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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