The Political Economy of Environmental Taxes with an Aging Population
Author | : Tetsuo Ono |
Publisher | : |
Total Pages | : 0 |
Release | : 2014 |
ISBN-10 | : OCLC:1376549426 |
ISBN-13 | : |
Rating | : 4/5 (26 Downloads) |
Book excerpt: This paper develops a two-period overlapping-generations model with environmental externalities and uncertain lifetimes, and studies how two sources of population aging, greater longevity and a lower rate of population growth, affect the politically determined environmental tax and the quality of the environment. It is shown that greater longevity and a lower rate of population growth have entirely different effects on these factors; greater longevity has no effect on the environmental tax and has a non-positive effect on the environmental quality, whereas a lower rate of population growth has a negative effect on the tax and has a positive effect on the quality. In addition, the political decision-making on the tax leads to an inefficient allocation of capital and environmental quality.