Suchergebnisse

This paper examines the feasibility of environmentally sustainable growth in a competitive market economy assuming various types of technological changes affecting pollution emissions and ultimately climate change. We consider two final outputs and two factors of production, accounting for both pollution flow and stock effects. If the initial level of pollution emissions satisfies certain boundary conditions, a Pigouvian pollution tax may assure sustainable growth without any further government intervention. This is true even if exogenous technological change is assumed to benefit exclusively the pollution-intensive industries (the "dirty" sector). A consumers' composition effect (often neglected in the literature), driven by an endogenous change in the relative prices between clean and dirty final goods under an optimal pollution tax, plays a critical role in the structural transformation process to achieve long-run sustainable economic growth.

This paper hypothesizes that fiscal policy is one important factor determining whether or not environmentally and socially sustainable economic growth is possible. We postulate that tax policies affect the incentives to make the economy more or less dependent on natural resources and the environment as factors of production. So-called pro-growth tax policies consisting on a low tax burden, low direct taxes but high indirect ones, affect the composition of factor endowment, often inducing over investment in physical capital and under investment in human capital including education and health. These policies in part explain a structure of production heavily dependent on natural resource-based and environmentally-dirty industries. Also, these tax policies induce high levels of inequality that ultimately may render economic growth socially and politically unsustainable. This analysis has important implications for Chile and other developing countries especially in Latin America which are highly dependent on natural resources and have unequal income distribution.