Hostname: page-component-7dd5485656-s6l46 Total loading time: 0 Render date: 2025-10-31T06:08:03.369Z Has data issue: false hasContentIssue false
  • English
  • Français

A NOTE ON ENVIRONMENT-DEPENDENT TIME PREFERENCES

Published online by Cambridge University Press:  16 April 2015

Hsun Chu ,
Ching-chong Lai  and
Chih-hsing Liao
Hsun Chu
Affiliation:
Tunghai University
Ching-chong Lai
Affiliation:
Institute of Economics, Academia Sinica, National Cheng Chi University, Institute of Economics, National Sun Yat-Sen University and Feng Chia University
Chih-hsing Liao*
Affiliation:
Chinese Culture University
*
Address correspondence to: Chih-hsing Liao, Department of Economics, Chinese Culture University, No. 55, Hwa-Kang Road, Yang-Ming-Shan, Taipei 11114, Taiwan; email: chihhsingliao@gmail.com.
Get access Rights & Permissions [Opens in a new window]

Abstract

In this paper we investigate the growth effect of environmental taxes when time preference is endogenously determined by environmental quality. We find that if people become more patient because of a cleaner environment, raising the environmental tax may reduce pollution and stimulate growth. Moreover, the Pigouvian principle may be inefficient in the presence of endogenous time preference.

Keywords

Endogenous Time PreferenceEndogenous GrowthPigouvian Tax

Information

Type
Notes
Information
Macroeconomic Dynamics , Volume 20 , Issue 6 , September 2016 , pp. 1652 - 1667
Copyright
Copyright © Cambridge University Press 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

References

REFERENCES

Agénor, P.R. (2010) A theory of infrastructure-led development. Journal of Economic Dynamics and Control 34, 932–950.Google Scholar
Ayong Le Kama, A. and Schubert, K. (2007) A note on the consequence of an endogenous discounting depending on the environmental quality. Macroeconomic Dynamics 11, 272–289.Google Scholar
Barro, R.J. and Sala-i-Martin, X. (1992) Public finance in models of economic growth. Review of Economic Studies 59, 645–661.CrossRefGoogle Scholar
Becker, G.S. and Mulligan, C.B. (1997) The endogenous determination of time preference. Quarterly Journal of Economics 112, 729–758.Google Scholar
Bento, A. and Jacobsen, M. (2007) Ricardian rents, environmental policy and the “double-dividend” hypothesis. Journal of Environmental Economics and Management 53, 17–31.CrossRefGoogle Scholar
Bovenberg, A.L. and de Mooij, R.A. (1994) Environmental levies and distortionary taxation. American Economic Review 84, 1085–1089.Google Scholar
Bovenberg, A.L. and de Mooij, R.A. (1997) Environmental tax reform and endogenous growth. Journal of Public Economics 63, 207–237.Google Scholar
Bovenberg, A.L. and Goulder, L.H. (1996) Optimal environmental taxation in the presence of other taxes: General-equilibrium analyses. American Economic Review 86, 985–1000.Google Scholar
Bovenberg, A.L. and Smulders, S. (1995) Environmental quality and pollution-augmenting technical change in a two-sector endogenous growth model. Journal of Public Economics 57, 369–391.Google Scholar
Bovenberg, A.L. and Smulders, S. (1996) Transitional impacts of environmental policy in an endogenous growth model. International Economic Review 37, 861–893.Google Scholar
Chang, J.J., Chen, J.H., Shieh, J.Y., and Lai, C.C. (2009) Optimal tax policy, market imperfections, and environmental externalities in a dynamic optimizing macro model. Journal of Public Economic Theory 11, 623–651.CrossRefGoogle Scholar
Chang, W.Y., Tsai, H.F., and Lai, C.C. (1998) Government spending and capital accumulation with endogenous time preference. Canadian Journal of Economics 31, 624–645.CrossRefGoogle Scholar
Chen, J.H., Lai, C.C., and Shieh, J.Y. (2003) Anticipated environmental policy and transitional dynamics in an endogenous growth model. Environmental and Resource Economics 25, 233–254.Google Scholar
Epstein, L.G. (1987) A simple dynamic general equilibrium model. Journal of Economic Theory 41, 68–95.Google Scholar
Fullerton, D. and Kim, S.R. (2008) Environmental investment and policy with distortionary taxes, and endogenous growth. Journal of Environmental Economics and Management 56, 141–154.CrossRefGoogle Scholar
Hartwick, J.M. (1991) Degradation of environmental capital and national accounting procedures. European Economic Review 35, 642–649.Google Scholar
Heijdra, B.J. (2009) Foundations of Modern Macroeconomics, 2nd ed. New York: Oxford University Press.CrossRefGoogle Scholar
Hettich, F. (1998) Growth effect of a revenue-neutral environmental tax reform. Journal of Economics 67, 287–316.CrossRefGoogle Scholar
Itaya, J. (2008) Can environmental taxation stimulate growth? The role of indeterminacy in endogenous models with environmental externalities. Journal of Economic Dynamics and Control 32, 1156–1180.CrossRefGoogle Scholar
Kam, E. (2005) A note on time preference and the Tobin effect. Economics Letters 89, 127–132.CrossRefGoogle Scholar
Lawrence, E.C. (1991) Poverty and the rate of time preference: Evidence from panel data. Journal of Political Economy 99, 54–75.Google Scholar
Ligthart, J.E. and van der Ploeg, F. (1994) Pollution, the cost of public funds and endogenous growth. Economics Letters 46, 351–361.Google Scholar
Liu, A.A. (2013) Tax evasion and optimal environmental taxes. Journal of Environmental Economics and Management 66, 656–670.CrossRefGoogle Scholar
Lucas, R.E. Jr., (1988) On the mechanics of economic development. Journal of Monetary Economics 22, 3–24.Google Scholar
Lucas, R.E. Jr. and Stokey, N.L. (1984) Optimal growth with many consumers. Journal of Economic Theory 32, 139–171.Google Scholar
Mohsin, M. (2004) Exchange rate policies and endogenous time preference: A dynamic analysis of a small open economy. Economics Letters 82, 195–203.Google Scholar
Nairay, A. (1984) Asymptotic behavior and optimal properties of a consumption–investment model with variable time preference. Journal of Economic Dynamics and Control 7, 283–313.Google Scholar
Nakada, M. (2004) Does environmental policy necessarily discourage growth? Journal of Economics 81, 249–275.Google Scholar
Nakada, M. (2010) Environmental tax reform and growth: Income tax cuts or profits tax reduction. Environmental and Resource Economics 47, 549–565.Google Scholar
Obstfeld, M. (1990) Intertemporal dependence, impatience, and dynamics. Journal of Monetary Economics 26, 45–75.CrossRefGoogle Scholar
Ogaki, M. and Atkenson, A. (1997) Rate of time preference, intertemporal elasticity of substitution, and level of wealth. Review of Economics and Statistics 79, 564–572.Google Scholar
Ono, T. (2003a) Environmental tax policy and long-run economic growth. Japanese Economic Review 54, 203–217.Google Scholar
Ono, T. (2003b) Environmental tax policy in a model of growth cycles. Economic Theory 22, 141–168.Google Scholar
Ono, T. (2007) Growth and welfare effects of an environmental tax-based public pension reform. Japanese Economic Review 58, 362–381.CrossRefGoogle Scholar
Palivos, T., Wang, P., and Zhang, J. (1997) On the existence of balanced growth equilibrium. International Economic Review 38, 205–223.Google Scholar
Pautrel, X. (2012) Environmental policy, education and growth: A reappraisal when lifetime is finite. Macroeconomic Dynamics 16, 661–685.Google Scholar
Pittel, K. (2002) Sustainability and Endogenous Growth. Cheltenham, UK: Edward Elgar.Google Scholar
Pommeret, A. and Schubert, K. (2009) Abatement technology adoption under uncertainty. Macroeconomic Dynamics 13, 493–522.CrossRefGoogle Scholar
Prieur, F. and Bréchet, T. (2013) Can education be good for both growth and the environment? Macroeconomic Dynamics 17, 1135–1157.Google Scholar
Ricci, F. (2007) Environmental policy and growth when inputs are differentiated in pollution intensity. Environmental and Resource Economics 38, 285–310.Google Scholar
Romer, P. (1986) Increasing returns and long-run growth. Journal of Political Economy 94, 1002–1037.Google Scholar
Samwick, A.A. (1998) Discount rate homogeneity and social security reform. Journal of Development Economics 57, 117–146.CrossRefGoogle Scholar
Smulders, S. (1995) Entropy, environment and endogenous economic growth. International Tax and Public Finance 2, 319–340.Google Scholar
Smulders, S. and Gradus, R. (1996) Pollution abatement and long-term growth. European Journal of Political Economy 12, 505–532.Google Scholar
Turnovsky, S.J. (2000) Methods of Macroeconomic Dynamics, 2nd ed. Cambridge, MA: MIT Press.Google Scholar
Uzawa, H. (1968) Time preference, the consumption function, and optimum asset holdings. In Wolfe, John N. (ed.), Value, Capital and Growth: Papers in Honour of Sir John Hicks, pp. 485–504. Edinburgh, UK: Edinburgh University Press.Google Scholar
van Ewijk, C. and van Wijnbergen, S. (1995) Can abatement overcome the conflicts between the environment and economic growth? De Economist 143, 197–216.Google Scholar
van Zon, A. and Yetkiner, I.H. (2003) An endogenous growth model with embodied energy-saving technical change. Resource and Energy Economics 25, 81–103.CrossRefGoogle Scholar
Vella, E., Dioikitopoulos, E.V., and Kalyvitis, S. (in press) Green spending reforms, growth and welfare with endogenous subjective discounting. Macroeconomic Dynamics.Google Scholar
Viscusi, W.K., Huber, J., and Bell, J. (2008) Estimating discount rates for environmental quality from utility-based choice experiments. Journal of Risk Uncertainty 37, 199–220.Google Scholar
Weitzman, M.L. (1994) On the “environmental” discount rate. Journal of Environmental Economics and Management 26, 200–209.CrossRefGoogle Scholar
Williams, R.C. III, (2002) Environmental tax interactions when pollution affects health or productivity. Journal of Environmental Economics and Management 44, 261–270.Google Scholar
Williams, R.C. III, (2003) Health effects and optimal environmental taxes. Journal of Public Economics 87, 323–335.Google Scholar
Yanase, A. (2011) Impatience, pollution, and indeterminacy. Journal of Economic Dynamics and Control 35, 1789–1799.CrossRefGoogle Scholar