Public Debt, Life Expectancy and the Environment

Nicolas Clootens

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Abstract: This paper aims to provide policy recommendations to improve both environmental quality and growth in the context of debt consolidation. For that purpose, we develop an overlapping generation model in which we include public debt, and we modelize the two-way causality between life expectancy and the environment. We use a phase diagram to demonstrate the possibility of an environmental poverty trap. Using comparative statics around steady states, we find that a voluntary environmental policy may allow a country to escape the environmental poverty trap, or may help a country to reach a higher level of development. This paper also argues in favor of debt-for-nature swap mechanisms. Finally, by means of a welfare analysis, we find that public debt is a useful instrument to simultaneously solve the capital over-accumulation problem and reach environmental objectives, but it must be used with caution

Keywords: Environment; Life expectancy; Overlapping generations; Poverty trap; Public debt (search for similar items in EconPapers)
Date: 2017-06
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Citations: View citations in EconPapers (11)

Published in Environmental Modelling and Assessment, 2017, 22 (Issue 3), pp.267-278. ⟨10.1007/s10666-016-9535-1⟩

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Working Paper: Public Debt, Life Expectancy and the Environment (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01203731

DOI: 10.1007/s10666-016-9535-1

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