Green Spending Reforms, Growth and Welfare with Endogenous Subjective Discounting

Eugenia Vella, Evangelos Dioikitopoulos and Sarantis Kalyvitis

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: This paper studies optimal fiscal policy, in the form of taxation and the allocation of tax revenues between infrastructure and environmental investment, in a general-equilibrium growth model with endogenous subjective discounting. A green spending reform, defined as a reallocation of government expenditures towards the environment, can procure a double dividend by raising growth and improving environmental conditions, although the environment does not impact the production technology. Also, endogenous Ramsey and growth-maximizing policies eliminate the possibility of an 'environmental and economic poverty trap'. Finally, we examine the optimal response of the Ramsey government to greener preferences.

Keywords: endogenous time preference; growth; environmental quality; second-best fiscal policies (search for similar items in EconPapers)
Pages: 43 pages JEL Classification: D90, E21, E62, H31, O44, Q28
Date: 2012-09
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: GREEN SPENDING REFORMS, GROWTH, AND WELFARE WITH ENDOGENOUS SUBJECTIVE DISCOUNTING (2015)
Working Paper: Green Spending Reforms, Growth and Welfare with Endogenous Subjective Discounting (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c017_045

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