The Political Economy of Environmental Policy with Overlapping Generations

Abstract

A two-sector OLG model illuminates previously unexamined intergenerational effects of a tax that protects an environmental stock. A traded asset capitalizes the economic returns to future tax-induced environmental improvements, benefiting the current asset owners, the old generation. Absent a transfer, the tax harms the young generation by decreasing their real wage. Future generations benefit from the tax-induced improvement in environmental stock. The principal intergenerational conflict arising from public policy is between generations alive at the time society imposes the policy, not between generations alive at different times. A Pareto-improving policy can be implemented under various political economy settings.

Global Demographic Change and Climate Policies

“…None of these studies point to the impact of demographic patterns on savings rates and, subsequently, on climate policies. 9 Karp and Rezai (2014) use an OLG model for a somewhat different purpose. They show that if the environmental benefits of climate policies can be capitalized in an increased value of the capital stock, current generations also benefit from environmental policies.…”

Instrument Choice and Stranded Assets in the Transition to Clean Capital

“…First, while the literature on instrument choice for environmental policy has established that the carbon price is the most efficient instrument (Pigou, 1932;Goulder and Parry, 2008;Fischer and Newell, 2008), 3 less attention has been paid to their different distributional impacts. Most studies focus on the impact of carbon prices, and look at distribution in terms of different income categories (e.g., Rausch et al, 2010;Fullerton, Heutel and Metcalf, 2012;Coady, Flamini and Sears, 2015;Borenstein and Davis, 2015) or different generations (e.g., Karp and Rezai, 2012). Few papers explore how different policies set costs on different sectors of the economy.…”

Проблема Глобального Потепления И Последствия Борьбы С Ней Для Российской Экономики

“…[2], которая также близка к исследованиям [3][4][5]7] (Bovenberg, Bovenberg, Heijdra, 2002;Karp, Rezai, 2014), посвящена поиску механизмов снижения и замедления негатив-ного влияния выбросов углеводородов на окружающую среду в рамках модели пере-крывающихся поколений, иллюстрирующей так называемый зеленый парадокс. В частности, в качестве такого механизма авторы предлагают ввести налог на выбросы углеводородов.…”