"Environmental fiscal polices might be ineffective to control pollution".
ISSN: 2341-2356
Año de publicación: 2003
Número: 7
Tipo: Documento de Trabajo
Otras publicaciones en: Documentos de Trabajo (ICAE)
Resumen
In a one sector growth model with pollution in the utility function, the competitive equilibrium can be indeterminate for plausible values of the intertemporal substitution elasticity of consumption and under constant returns to scale. The tax rate on pollution does not enter the condition characterizing indeterminacy. This means that the government is not able to control emissions in the economy by using environmental policies. Non-separability between private consumption and pollution in the utility function is crucial for this result.