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The Political Economics of Green Transitions: Optimal Intertemporal Policy Response

Author

Listed:
  • Lorenz Dögnitz
  • Théo Konc
  • Linus Mattauch

Abstract

Besley and Persson (2023) pioneer a political economy model of a green transition with changing preferences. Here we solve for the optimal policy intervention and find that the optimal tax on the polluting good starts high and is subsequently declining, to support the transition in preferences. We quantify the welfare loss of ignoring preference changes.

Suggested Citation

  • Lorenz Dögnitz & Théo Konc & Linus Mattauch, 2024. "The Political Economics of Green Transitions: Optimal Intertemporal Policy Response," Berlin School of Economics Discussion Papers 0047, Berlin School of Economics.
    • Handle: RePEc:bdp:dpaper:0047
    DOI: 10.48462/opus4-5596
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    More about this item

    Keywords

    Endogenous preferences; green transition; carbon tax; political economics; intertemporal optimisation;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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