On the fiscal strategies of escaping poverty-environment traps (and) towards sustainable growth

Nguyen Thang Dao; Ottmar Edenhofer

An economy with clean and dirty intermediate inputs may fall into a trap characterized by low environmental quality and low life expectancy, while the others converge to opposite steady states. We propose new strategies towards sustainable growth. They include: (i) taxes (subsidies) imposed on the production of intermediate inputs to improve environmental quality, and therefore, life expectancy and capital accumulation, in order to guarantee that an economy locked in a poverty-environment trap can escape the stagnation; (ii) taxes (subsidies) imposed on the production of intermediate inputs, consumption, and capital income in order to decentralize the transition to the social optimum.

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Year of publication:	2014
Authors:	Dao, Thang ; Edenhofer, Ottmar
Publisher:	München : CESifo
Subject:	overlapping generations economy \| poverty-environment trap \| intermediate sectors \| final good sectors \| fiscal policy \| Finanzpolitik \| Fiscal policy \| Overlapping Generations \| Overlapping generations \| Theorie \| Theory \| Nachhaltige Entwicklung \| Sustainable development \| Armut \| Poverty