Environmental fiscal policies might be ineffective to control pollution

Esther Fernández, Pfe216, Rafaela Perez and Jesus Ruiz
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Pfe216: Departamento de Análisis Económico y Economía Cuantitativa. Universidad Complutense de Madrid., https://www.ucm.es/fundamentos-analisis-economico2

Documentos de Trabajo del ICAE from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico

Abstract: In a one sector growth model with pollution in the utility function, the competitive equilibrium can be indeterminate for plausible values of the intertemporal substitution elasticity of consumption and under constant returns to scale. The tax rate on pollution does not enter the condition characterizing indeterminacy. This means that the government is not able to control emissions in the economy by using environmental policies. Non-separability between private consumption and pollution in the utility function is crucial for this result.

Keywords: Growth model; Control emissions; Environmental policies (search for similar items in EconPapers)
Pages: 16 pages
Date: 2003
New Economics Papers: this item is included in nep-env
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Working Paper: Environmental fiscal policies might be ineffective to control pollution (2003)
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