Vella, E., Dioikitopoulos, E.V. and Kalyvitis, S. (2014) Green Spending Reforms, Growth, and Welfare with Endogenous Subjective Discounting. Macroeconomic Dynamics, 19 (6). pp. 1240-1260. ISSN 1365-1005
Abstract
This paper studies optimal fiscal policy, in the form of taxation and the allocation of tax revenues between infrastructure and environmental investment, in a general-equilibrium growth model with endogenous subjective discounting. A green spending reform, defined as a reallocation of government expenditures toward the environment, can procure a double dividend by raising growth and improving environmental conditions, although the environment does not impact the production technology. Also, endogenous Ramsey fiscal policy eliminates the possibility of an environmental and economic poverty trap. In contrast to the case of exogenous discounting, green spending reforms are the optimal response of the Ramsey government to a rise in the agents' environmental concerns.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2014 Cambridge University Press. Article available under the terms of the CC-BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/). |
Keywords: | Endogenous Time Preference; Growth; Environmental Quality; Second-Best Fiscal Policy |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 17 Feb 2016 12:30 |
Last Modified: | 30 Apr 2020 09:03 |
Published Version: | http://dx.doi.org/10.1017/S1365100513000813 |
Status: | Published |
Publisher: | Cambridge University Press |
Refereed: | Yes |
Identification Number: | 10.1017/S1365100513000813 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:95236 |