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Political Institutions, Environmental Policy and Growth

Author

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  • Renström, Thomas I
  • Marsiliani, Laura

Abstract

We analyse the impact of micro-founded political institutions on environmental policy and economic growth. We model an overlapping-generations economy, where individuals differ in preferences over the environment (as well as in age). Labour taxation and capital taxation is used to finance a public good and a public production factor, period by period. The underlying political institution is a parliament. Party entry, parliamentary composition, coalition formation, and bargaining are endogenous. The benchmark is when all decisions are taken in parliament. We compare this constitution with an independent regulator, elected in parliament. The regulatory regime causes lower pollution, but production inefficiency.

Suggested Citation

  • Renström, Thomas I & Marsiliani, Laura, 2004. "Political Institutions, Environmental Policy and Growth," CEPR Discussion Papers 4670, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4670
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    Cited by:

    1. Renström, Thomas I & Marsiliani, Laura, 2007. "Political Institutions and Economic Growth," CEPR Discussion Papers 6143, C.E.P.R. Discussion Papers.
    2. Laura Marsiliani & Thomas Renström, 2007. "Political institutions and economic growth," Economics of Governance, Springer, vol. 8(3), pages 233-261, May.

    More about this item

    Keywords

    Comparative politics; Voting; Bargaining; Taxation; Environmental policy; Endogenous growth; Overlapping generations;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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