Environmental Policy and Growth in a Model with Endogenous Environmental Awareness

Karine Constant and Marion Davin ()

No 1405, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: This paper examines the relationship between environmental policy and growth when green preferences are endogenously determined by education and pollution. The government can implement a tax on pollution and recycle the revenue in public pollution abatement and/or education subsidy (influencing green behaviors). When agent’s preferences for the environment are highly sensitive to environmental damages, the economy can converge to a balanced growth path equilibrium with damped oscillations. Therefore, we identify two objectives that environmental policy seeks to address: remove oscillations, source of intergenerational inequalities, and enhance the long-term growth rate. We show that a tighter tax allows to achieve both objectives when the tax revenue is well allocated between education and direct environmental protection.

Keywords: environmental policy; endogenous growth; environmental wareness; Education (search for similar items in EconPapers)
JEL-codes: I25 O44 Q58 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2014-03, Revised 2014-03
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Related works:
Working Paper: Environmental Policy and Growth in a Model with Endogenous Environmental Awareness (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1405

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