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Environmental pollution, the public sector and economic growth: A comparison of different scenarios
Author(s) -
Greiner Alfred
Publication year - 2010
Publication title -
optimal control applications and methods
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.458
H-Index - 44
eISSN - 1099-1514
pISSN - 0143-2087
DOI - 10.1002/oca.951
Subject(s) - pollution , economics , stock (firearms) , natural resource economics , welfare , tax revenue , revenue , tax rate , investment (military) , endogenous growth theory , production (economics) , government (linguistics) , public economics , microeconomics , economic growth , macroeconomics , human capital , finance , market economy , engineering , mechanical engineering , ecology , linguistics , philosophy , politics , political science , law , biology
In this paper we present an endogenous growth model with productive public capital and environmental pollution. Emissions result from production and raise the stock of pollution that negatively affects the utility of the household. The government levies an income tax and a tax on emissions and uses its revenues for public investment and for abatement of pollution. This paper studies the structure of the model assuming three different scenarios and analyzes how the latter affects the balanced growth rate of the economy and welfare. The first scenario posits that abatement is set such that the stock of pollution is constant, in the second scenario pollution declines over time, and in the third scenario, pollution grows at the same positive rate as the economic variables. Copyright © 2010 John Wiley & Sons, Ltd.