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Covid-19 and a Green Recovery?

Author

Listed:
  • Aditya Goenka

    (University of Birmingham)

  • Lin Liu

    (University of Liverpool)

  • Nguyen, Manh-Hung

    (Toulouse School of Economics)

Abstract

Preliminary evidence indicates that pollution increases severity and likelihood of Covid- 19 infections as is the for many other infectious diseases. This paper models the interaction of pollution and preventive actions on transmission of infectious diseases in a neoclassical growth framework where households do not take into account how their actions affects disease transmission and production activity results in pollution which increases likelihood of infections. Household can take private actions for abatement of pollution as for controlling disease transmission. Disease dynamics follow SIS dynamics. We study the difference in health and economic outcomes between the decentralized economy, where households do not internalize the externalities, and the socially optimal outcomes, and characterize the taxes and subsidies that will decentralize the socially optimal outcomes. Thus, we examine the question whether there are sufficient incentives to reduce pollution, both at the private and public levels, once its effects on disease transmission is taken into account.

Suggested Citation

  • Aditya Goenka & Lin Liu & Nguyen, Manh-Hung, 2020. "Covid-19 and a Green Recovery?," Discussion Papers 20-29, Department of Economics, University of Birmingham.
    • Handle: RePEc:bir:birmec:20-29
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    References listed on IDEAS

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    1. Aditya Goenka & Lin Liu & Manh-Hung Nguyen, 2021. "Modeling optimal quarantines with waning immunity," Discussion Papers 21-10, Department of Economics, University of Birmingham.
    2. Goenka, Aditya & Liu, Lin & Nguyen, Manh-Hung, 2021. "SIR economic epidemiological models with disease induced mortality," Journal of Mathematical Economics, Elsevier, vol. 93(C).
    3. Stefano Bosi & David Desmarchelier, 2021. "Pollution effects on disease transmission and economic stability," International Journal of Economic Theory, The International Society for Economic Theory, vol. 17(2), pages 169-189, June.
    4. Mark Gersovitz & Jeffrey S. Hammer, 2004. "The Economical Control of Infectious Diseases," Economic Journal, Royal Economic Society, vol. 114(492), pages 1-27, January.
    5. Goenka, Aditya & Jafarey, Saqib & Pouliot, William, 2020. "Pollution, mortality and time consistent abatement taxes," Journal of Mathematical Economics, Elsevier, vol. 88(C), pages 1-15.
    6. Martin S Eichenbaum & Sergio Rebelo & Mathias Trabandt, 2021. "The Macroeconomics of Epidemics [Economic activity and the spread of viral diseases: Evidence from high frequency data]," The Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5149-5187.
    7. Goenka, Aditya & Liu, Lin & Nguyen, Manh-Hung, 2014. "Infectious diseases and economic growth," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 34-53.
    8. Stefano Bosi & David Desmarchelier, 2018. "Pollution and infectious diseases," International Journal of Economic Theory, The International Society for Economic Theory, vol. 14(4), pages 351-372, December.
    9. Geoffard, Pierre-Yves & Philipson, Tomas, 1996. "Rational Epidemics and Their Public Control," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(3), pages 603-624, August.
    10. Goenka, Aditya & Liu, Lin & Nguyen, Manh-Hung, 2020. "Modeling optimal quarantines under infectious disease related mortality," TSE Working Papers 20-1136, Toulouse School of Economics (TSE).
    11. Aditya Goenka & Lin Liu, 2020. "Infectious diseases, human capital and economic growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(1), pages 1-47, July.
    12. Aditya Goenka & Lin Liu, 2012. "Infectious diseases and endogenous fluctuations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(1), pages 125-149, May.
    13. Liu, Shenglong & Hu, Angang, 2013. "Demographic change and economic growth: Theory and evidence from China," Economic Modelling, Elsevier, vol. 35(C), pages 71-77.
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    Cited by:

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    3. Xu, Jiaqi & Zhao, Jingfeng & Liu, Wen, 2023. "A comparative study of renewable and fossil fuels energy impacts on green development in Asian countries with divergent income inequality," Resources Policy, Elsevier, vol. 85(PA).
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    5. Hu, Xiaofeng, 2023. "Green economic recovery in Central Asia by utilizing natural resources," Resources Policy, Elsevier, vol. 83(C).
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    More about this item

    Keywords

    Covid-19; pollution; environmental policy; infectious disease; Green Recovery; dynamic Pigovian taxes;
    All these keywords.

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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