Journal of Economics and Development, Vol. 13, No. 2, August 2011, pp. 3-26.
https://doi.org/10.33301/2011.13.02.01
https://doi.org/10.33301/2011.13.02.01
Environmental Policy, Health and Growth
Abstract:
This paper develops a standard neoclassical model of growth in which pollution affects individuals' health and the government can influence the quality of the environment via a tax on emissions. In such an economy, we analyze the effects of a change in this policy on the trade-offs between the resources allocated to abatement, health and consumption (or savings). We demonstrate that less pollution lowers healthcare spending, and shows the existence of an inverted U-shaped relationship between the pollution tax and (i) the level of health; (ii) consumption; and (iii) welfare. Results are analyzed both at steady state and along a transition path.Keywords:Pollution, Health, Welfare, Environmental Policy, Growth.
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