The Green Golden Rule: habit and anticipation of future consumption

Joao Faria and Peter McAdam ()

No 2247, Working Paper Series from European Central Bank

Abstract: We derive the Green Golden Rule (GGR) in the Habit Formation (HF) and Anticipation of Future Consumption (AFC) frameworks. Since consumption is the key variable of GGR, time non-separabilities in preferences over consumption streams, given by the AFC and HF, may have important impacts on the environment and sustainability. We demonstrate that agents who smooth their consumption patterns, according to the HF hypothesis, are more likely to preserve the environment than those who anticipate future consumption or who do not so smooth consumption. JEL Classification: D90, Q56

Keywords: environment; growth; resources; sustainability (search for similar items in EconPapers)
Date: 2019-02
New Economics Papers: this item is included in nep-env and nep-evo
Note: 50336
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The green golden rule: Habit and anticipation of future consumption (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20192247

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