IDEAS home Printed from https://ideas.repec.org/p/roc/wallis/wp31.html
   My bibliography  Save this paper

Environmental Policy and Capital Movements: The Role of Government Commitment

Author

Listed:
  • Laura Marsiliani

    (W. Allen Wallis Institute of Political Economy, University of Rochester)

  • Thomas Renstrom

    (W. Allen Wallis Institute of Political Economy, University of Rochester and CEPR)

Abstract

This paper explores the relationship between environmental protection and international capital movements, when tax policy is endogenous (through voting). A two-period general equilibrium model of a small open economy is specified to compare the effects of two different constitutions (commitment or no commitment in tax policy), as well as income inequality. Under the commitment regime, the equilibrium is characterised by a lower labour tax, higher environmental tax and less capital moving abroad than in the no-commitment equilibrium. Furthermore, given the degree of commitment, more equal societies are characterised by tougher environmental policy and less capital moving abroad.

Suggested Citation

  • Laura Marsiliani & Thomas Renstrom, 2002. "Environmental Policy and Capital Movements: The Role of Government Commitment," Wallis Working Papers WP31, University of Rochester - Wallis Institute of Political Economy.
    • Handle: RePEc:roc:wallis:wp31
    as

    Download full text from publisher

    File URL: http://www.wallis.rochester.edu/WallisPapers/wallis_31.pdf
    File Function: full text
    Download Restriction: None
    ---><---

    References listed on IDEAS

    as
    1. Persson, Torsten & Tabellini, Guido, 1994. "Representative democracy and capital taxation," Journal of Public Economics, Elsevier, vol. 55(1), pages 53-70, September.
    2. Rauscher, Michael, 1997. "International Trade, Factor Movements, and the Environment," OUP Catalogue, Oxford University Press, number 9780198290506.
    3. de Bovenberg, A Lans & Mooij, Ruud A, 1994. "Environmental Levies and Distortionary Taxation," American Economic Review, American Economic Association, vol. 84(4), pages 1085-1089, September.
    4. Bovenberg, A Lans & van der Ploeg, Frederick, 1993. "Green Policies in a Small Open Economy," CEPR Discussion Papers 785, C.E.P.R. Discussion Papers.
    5. Marsiliani, L. & Renstrom, T.I., 2000. "Inequality, Environmental Protection and Growth," Discussion Paper 2000-34, Tilburg University, Center for Economic Research.
    6. repec:bla:scandj:v:96:y:1994:i:3:p:343-63 is not listed on IDEAS
    7. Oates, Wallace E. & Schwab, Robert M., 1988. "Economic competition among jurisdictions: efficiency enhancing or distortion inducing?," Journal of Public Economics, Elsevier, vol. 35(3), pages 333-354, April.
    8. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    9. Marsiliani, Laura & Renstrom, Thomas I, 2000. "Time Inconsistency in Environmental Policy: Tax Earmarking as a Commitment Solution," Economic Journal, Royal Economic Society, vol. 110(462), pages 123-138, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Renström, Thomas I & Marsiliani, Laura, 2003. "Environmental Policy and Capital Movements: The Role of Government Commitment," CEPR Discussion Papers 3727, C.E.P.R. Discussion Papers.
    2. Laura Marsiliani & Thomas I. Renström, 2003. "Environmental Policy and Capital Movements: The Role of Government Commitment," Working Papers 2003.4, Fondazione Eni Enrico Mattei.
    3. Laura Marsiliani & Thomas Renstrom, 2002. "Inequality, Environmental Protection and Growth," Wallis Working Papers WP35, University of Rochester - Wallis Institute of Political Economy.
    4. Renström, Thomas I & Marsiliani, Laura, 2003. "On Income Inequality and Green Preferences," CEPR Discussion Papers 3677, C.E.P.R. Discussion Papers.
    5. Laura Marsiliani & Thomas Renstrom, 2002. "On Income Inequality and Green Preferences," Wallis Working Papers WP30, University of Rochester - Wallis Institute of Political Economy.
    6. Laura Marsiliani & Thomas I Renstrom, 2005. "Political Institutions, Environmental Policy and Growth," Money Macro and Finance (MMF) Research Group Conference 2005 38, Money Macro and Finance Research Group.
    7. Renström, Thomas I & Marsiliani, Laura, 2003. "Inequality, Environmental Protection and Growth," CEPR Discussion Papers 3754, C.E.P.R. Discussion Papers.
    8. Michael Rauscher, 2001. "International Factor Movements, Environmental Policy, and Double Dividends," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 187-216, National Bureau of Economic Research, Inc.
    9. Brita Bye & Karine Nyborg, 1999. "The Welfare Effects of Carbon Policies: Grandfathered Quotas versus Differentiated Taxes," Discussion Papers 261, Statistics Norway, Research Department.
    10. Jaakkola, Niko & Spiro, Daniel & van Benthem, Arthur A., 2019. "Finders, keepers?," Journal of Public Economics, Elsevier, vol. 169(C), pages 17-33.
    11. Johan Lagerlöf, 1998. "Are We Better Off if Our Politicians Know How the Economy Works?," CIG Working Papers FS IV 98-07, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG), revised May 1999.
    12. Chiappinelli, Olga & May, Nils, 2022. "Too good to be true? Time-inconsistent renewable energy policies," Energy Economics, Elsevier, vol. 112(C).
    13. Lai, Yu-Bong, 2019. "Environmental policy competition and heterogeneous capital endowments," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 107-119.
    14. Warziniack, Travis W. & Finnoff, David & Shogren, Jason F., 2013. "Public economics of hitchhiking species and tourism-based risk to ecosystem services," Resource and Energy Economics, Elsevier, vol. 35(3), pages 277-294.
    15. Jurgen von Hagen, 2016. "Fiscal Federalism: Public Goods, Transfers, and Common Pools," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 10(2), pages 41-75, December.
    16. : Eduardo L. Giménez (a) & Miguel Rodríguez, "undated". "Pigou’S Dividend Versus Ramsey’S Dividend In The Double Dividend Literature," Working Papers 2-06 Classification-JEL :, Instituto de Estudios Fiscales.
    17. Thomas Aronsson & Karl‐Gustaf Löfgren & Tomas Sjögren, 2001. "Union Wage Setting and Capital Income Taxation in Dynamic General Equilibrium," German Economic Review, Verein für Socialpolitik, vol. 2(2), pages 141-175, May.
    18. Marsiliani, L. & Renstrom, T.I., 2000. "Inequality, Environmental Protection and Growth," Discussion Paper 2000-34, Tilburg University, Center for Economic Research.
    19. Patuelli, Roberto & Nijkamp, Peter & Pels, Eric, 2005. "Environmental tax reform and the double dividend: A meta-analytical performance assessment," Ecological Economics, Elsevier, vol. 55(4), pages 564-583, December.
    20. Bovenberg, A. Lans & van der Ploeg, Frederick, 1996. "Optimal taxation, public goods and environmental policy with involuntary unemployment," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 59-83, October.

    More about this item

    Keywords

    Environmental policy; international capital movements; time consistency; inequality; political economy; human capital;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:roc:wallis:wp31. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Richard DiSalvo (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.