| Authors |
Vella, E., Dioikitopoulos, E. and Kalyvitis, S. |
| Title |
Green Spending Reforms, Growth and Welfare with Endogenous Subjective Discounting |
| 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 towards 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'. Contrary 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. |
| Publication Status |
Forthcoming in Macroeconomic Dynamics |
| Keywords |
endogenous time preference, growth, environmental quality, second-best fiscal policy |
| Classification JEL |
D90, E21, E62, H31, |
| File |
VellaDioikitopoulosKalyvitis_wp.pdf (515537 bytes) |
| File-Function |
First version |
|
Copyright © 2009 [D.I.E.S.S. A.U.E.B.]. All rights reserved.
|
