Tax Reforms in an Endogenous Growth Model with Pollution

Esther Fernández, Rafaela Perez and Jesus Ruiz

No E2003/31, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: This paper discusses the effects of a green tax reform in an AK growth model without abatement activities and with a negative environmental externality in utility function. There is also a non-optimal level of public spending. The results depend on the financing source of public spending. When there is not public debt, a revenue-neutral green tax reform has not any effect on pollution, growth and welfare. On the contrary, when short-run deficits are financed by debt issuing, a variety of green tax reforms increase welfare. Nevertheless, in this framework, non-green tax reforms are also welfare improving.

Keywords: Environmental externalities; Economic growth; Pollution taxes; Laffer Curve. (search for similar items in EconPapers)
JEL-codes: H23 O41 Q28 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2003
New Economics Papers: this item is included in nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:cea:doctra:e2003_31

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