Environmental Abatement and Intergenerational Distribution

Bovenberg, A. Lans; Heijdra, Ben J.

doi:10.2139/ssrn.165652

Download This Paper

Open PDF in Browser

Add Paper to My Library

Environmental Abatement and Intergenerational Distribution

Tilburg University, CentER for Economic Research Working Paper No. 1998-100

37 Pages Posted: 14 Jul 1999

See all articles by A. Lans Bovenberg

A. Lans Bovenberg

Tilburg University - Center for Economic Research (CentER); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Ben J. Heijdra

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Abstract

This paper employs an overlapping generations model to explore the impact of public abatement on private investment and the intergenerational distribution of welfare. Whereas public abatement benefits old generations in terms of non-environmental welfare, future generations gain most in terms of environmental welfare. The overall benefits tend to be smallest for generations born at the time of the unanticipated policy shock. Public debt policy, however, can be employed to ensure that welfare gains are distributed more equally across the various generations. Such a policy implies that natural capital crowds out man-made capital.

JEL Classification: D60, H23, H63, Q28

Suggested Citation: Suggested Citation

Bovenberg, A. Lans and Heijdra, Ben J., Environmental Abatement and Intergenerational Distribution. Tilburg University, CentER for Economic Research Working Paper No. 1998-100, Available at SSRN: https://ssrn.com/abstract=165652 or http://dx.doi.org/10.2139/ssrn.165652