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Double Dividend Hypothesis, Golden Rule and Welfare Distribution

Author

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  • Mireille Chiroleu-Assouline

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Mouez Fodha

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper analyzes the double dividend issues within the framework of overlapping generations models. We characterize the necessary conditions for obtaining a double dividend, i.e. an improvement of environmental and non-environmental welfare when the revenue from the pollution tax is recycled into a change in the labor tax rate. We show that, depending on the initial capital stock and on the intertemporal elasticity of substitution, conditions may be defined to simultaneously allow (i) the obtaining of a long term double dividend, (ii) the economy to move closer to the modified golden rule and (iii) in the short term, an improvement in the welfare of the two present generations.

Suggested Citation

  • Mireille Chiroleu-Assouline & Mouez Fodha, 2006. "Double Dividend Hypothesis, Golden Rule and Welfare Distribution," Post-Print halshs-00089895, HAL.
    • Handle: RePEc:hal:journl:halshs-00089895
    DOI: 10.1016/j.jeem.2005.09.007
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00089895
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