A Note on Environmental Policy and Public Debt Stabilization

Mouez Fodha and Thomas Seegmuller

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Abstract: This article analyzes the consequences of environmental tax policy under public debt stabilization constraint. A public sector of pollution abatement is financed by a tax on pollutant emissions and/or by public debt. At the same time, households can also invest in private pollution abatement activities. We show that the economy may be characterized by an environmental-poverty trap if debt is too large or public abatement is not sufficiently efficient with respect to the private one. However, there exists a level of public abatement and debt at which a stable steady state is optimal.

Keywords: Environmental Taxation; Public and Private Abatements; Public Debt; Trap; Optimality (search for similar items in EconPapers)
Date: 2012-06
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Citations: View citations in EconPapers (20)

Published in Macroeconomic Dynamics, 2012, 16 (3), pp.477-492. ⟨10.1017/S1365100510000672⟩

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Related works:
Journal Article: A NOTE ON ENVIRONMENTAL POLICY AND PUBLIC DEBT STABILIZATION (2012)
Working Paper: A Note on Environmental Policy and Public Debt Stabilization (2012)
Working Paper: A Note on Environmental Policy and Public Debt Stabilization (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01308390

DOI: 10.1017/S1365100510000672

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