A DYNAMIC ANALYSIS OF PROTECTION AND ENVIRONMENTAL POLICY IN A SMALL TRADING DEVELOPING COUNTRY

Amitrajeet Batabyal and Hamid Beladi

Chapter 11 in Dynamic and Stochastic Approaches to the Environment and Economic Development, 2008, pp 189-212 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractWe analyze a dynamic model of protection and environmental policy in a small trading developing country (DC). The DC government protects the import competing (and the polluting) sector of the economy with a tariff. The employment and output effects of three different pollution taxes are analyzed. These taxes incorporate different assumptions about the DC government's ability to commit to its announced policy. First, we describe the taxes, we study the dependence of these taxes on the tariff, and we show that in general an activist environmental policy is called for, irrespective of the length of time to which the government can commit to its announced policy. Second, we identify a situation in which the conduct of environmental policy raises welfare unambiguously, and the situations in which it does not do so. Finally, we show that the time inconsistency of certain optimal programs can prevent the DC government from achieving its environmental and employment objectives.

Keywords: Economic Development; Environment; Natural Resources; Dynamic Modeling; Stochastic Modeling (search for similar items in EconPapers)
Date: 2008
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Journal Article: A dynamic analysis of protection and environmental policy in a small trading developing country (2002)
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