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Growth and welfare effects of environmental tax reform and public spending policy

Lookup NU author(s): Professor Walid Oueslati


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This paper considers the implications of environmental tax reform and public spending policy for growth and welfare. Using a two-sector endogenous growth model where the interactions between health, education, and the environment are taken into account, we show that revenue-positive tax reforms combined with a change in the public spending structure may improve long-run growth and welfare. However, this outcome incurs relatively high welfare cost during the transition phase. This is particularly the case when the spending policy favors education spending. (C) 2014 Elsevier B.V. All rights reserved.

Publication metadata

Author(s): Oueslati W

Publication type: Article

Publication status: Published

Journal: Economic Modelling

Year: 2015

Volume: 45

Pages: 1-13

Print publication date: 01/02/2015

Online publication date: 15/11/2014

Acceptance date: 17/10/2014

ISSN (print): 0264-9993

ISSN (electronic): 1873-6122

Publisher: Elsevier


DOI: 10.1016/j.econmod.2014.10.040


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