Environmental Policies under Debt Constraint

Abstract : This article analyzes the consequences of environmental tax policies when the government imposes a constraint on stabilizing public debt. A public sector of pollution abatement is financed by taxation and by issuing public debt. Considering a simple overlapping-generations model, the tax reform stimulates steady-state investment. Then, the environmental quality and the aggregate consumption increase if and only if (i) pollution abatement is large enough and (ii) there is under-accumulation of the per capita capital stock. This arises if environmental taxation allows a decrease of either income taxation or debt-output ratio.
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https://halshs.archives-ouvertes.fr/halshs-01023798
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Submitted on : Tuesday, July 15, 2014 - 11:36:46 AM
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Mouez Fodha, Thomas Seegmuller, Hiroaki Yamagami. Environmental Policies under Debt Constraint. 2014. ⟨halshs-01023798⟩

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