Assessment of Fiscal Intervention Measures : Perspectives from Environment Macroeconomics

The aim of this paper is to demonstrate the distinction in policy intervention when frameworks in environmental macroeconomics are applied as opposed to standard frameworks in macroeconomics. The key difference between the standard macroeconomic framework and the environmental macroeconomic framework is the internalization of environmental capital in the environmental macroeconomic framework. The intervention measures are focused on fiscal policy and environmental taxes, with illustrations made towards China. Like most countries, these economies adopted loose fiscal policies to prevent worsening unemployment and related problems in the context of the global financial crisis. Nevertheless, such fiscal laxity has exacerbated problems and issues pertaining to KN. The paper then attempts to canvass means of preventing the regressive effects of taxes by recourse to specific types of environmental capital investments