Dynamic laffer curve in an endogenous growth model with pollution

1. Esther Fernández Casillas
2. Rafaela Mª Pérez Sánchez
3. Jesús Ruiz Andújar

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lock_openDocta Complutense externo

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More publications in: Documentos de Trabajo (ICAE)

Abstract

This paper discusses the effects of a green tax reform in an AK growth model without abatement activities and with a negative environmental externality in utility function. There is also a non-optimal level of public spending. The results depend on the financing source of public spending. When there is not public debt, a revenue-neutral green tax reform has not any effect on pollution, growth and welfare. On the contrary, when short-run deficits are financed by debt issuing, a variety of green tax reforms increase welfare. Nevertheless, in this framework, non-green tax reforms are also welfare improving.

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