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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)
Date: 2012-09
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http://degit.sam.sdu.dk/papers/degit_17/C017_045.pdf (application/pdf)

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

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