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Double dividend in an endogenous growth model with pollution and abatement

Fernández Casillas, Esther and Pérez Sánchez, Rafaela María and Ruiz Andújar, Jesús (2008) Double dividend in an endogenous growth model with pollution and abatement. [ Workings ; nº WP/030, 2003, ]

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Abstract

This paper discusses wether by implementing an environmental tax reform, a
government may achieve a double dividend. We consider the simplest endogenous
growth model (AK model) and include a negative environmental externality in the
utility function. Pollution flow can be reduced by means of private abatenment
activities. There is a predetermined non-optimal level of public spending financed by
environmental taxes and pre-existing taxes on income and consumption. The major
contribution of the paper is to show that, under this simple framework, a double
dividend may arise if tax reform consists of substituing environmental tax for income
tax, in such a way that the government budget constraint holds in a present value sense.


Item Type:Working Paper or Technical Report
Additional Information:

JEL Classification: H23, O41, Q28

Uncontrolled Keywords:Double dividend, Green tax reform, Abatement activities, Environmental taxes, Environmental externalities, Endogenous growth, Dynamic Laffer effect.Doble dividendo, reforma medioambiental verde, Actividades de abatement, Externalidades medioambientales, Impuestos medioambientales, recimiento endógeno, Efecto Laffer dinámico.
Subjects:Social sciences > Economics > Econometrics
Series Name:Workings
Volume:2003
Number:WP/030
ID Code:7686
Deposited On:11 Mar 2008
Last Modified:06 Feb 2014 07:55

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