Environmental quality, public debt and economic development

Mouez Fodha and Thomas Seegmuller

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Abstract: This article analyzes the consequences on capital accumulation and environmental quality of environmental policies financed by public debt. A public sector of pollution abatement is financed by a tax and/or public debt. We show that if the initial capital stock is high enough, the economy monotonically converges to a long-run steady state. On the contrary, when the initial capital stock is low, the economy is relegated to an environmental-poverty trap. We also explore the implications of public policies on the trap and on the long-run stable steady state. In particular, we find that government should decrease debt and increase pollution abatement to promote capital accumulation and environmental quality at the stable long-run steady state.

Keywords: public debt; poverty trap; economic development; Environmental policies; pollution abatement (search for similar items in EconPapers)
Date: 2014
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00555625v1
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Citations: View citations in EconPapers (35)

Published in Environmental and Resource Economics, 2014, 57, pp.487-504. ⟨10.1007/s10640-013-9639-x⟩

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Related works:
Journal Article: Environmental Quality, Public Debt and Economic Development (2014)
Working Paper: Environmental quality, public debt and economic development (2014)
Working Paper: Environmental quality, public debt and economic development (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00555625

DOI: 10.1007/s10640-013-9639-x

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