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Pollution in a globalized world: Are debt transfers among countries a solution?

Marion Davin (), Mouez Fodha () and Thomas Seegmuller ()
Additional contact information
Marion Davin: CEE-M, Univ Montpellier, CNRS, INRA, SupAgro, Montpellier, France, http://www.cee-m.fr/member/davin-marion/
Thomas Seegmuller: Aix-Marseille Univ, CNRS, EHESS, Ecole Centrale, AMSE, Marseille, France, https://www.amse-aixmarseille.fr/en/membres/seegmuller

No 1925, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: This article analyzes the impacts of debt relief on production and pollution. We develop at wo-country overlapping generations model with environmental externalities, public debts and perfect mobility of assets. Pollutant emissions arise from production, but agents may invest in pollution mitigation. Could debt relief be an efficient tool to encourage less developed countries to engage in the fight against climate change? We consider a decrease of the debt of the poor country balanced by an increase of the richer country’s debt. We show that debt relief makes it possible to engage poor countries in the process of pollution abatement. Capital, environmental quality and welfare can increase in both countries. This result relies on the environmental sensitivity and the discount factor in the poor country relative to the rich one: the greater they are the more beneficial the debt relief is.

Keywords: pollution; abatement; overlapping generations; public debt; capital market integration (search for similar items in EconPapers)
JEL-codes: F43 H23 Q56 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2019-10
New Economics Papers: this item is included in nep-dge, nep-ene, nep-env and nep-res
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Related works:
Working Paper: Pollution in a globalized world: Are debt transfers among countries a solution? (2019) Downloads
Working Paper: Pollution in a globalized world: Are debt transfers among countries a solution? (2019) Downloads
Working Paper: Pollution in a globalized world: Are debt transfers among countries a solution? (2019) Downloads
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