Departmental Bulletin Paper ENVIRONMENTAL POLLUTION, INFORMAL SECTOR, PUBLIC EXPENDITURE AND ECONOMIC GROWTH

GUPTA, MANASH RANJAN  ,  BARMAN, TRISHITA RAY

56 ( 1 )  , pp.73 - 91 , 2015-06 , Hitotsubashi University
ISSN:0018-280x
NCID:AA00207547
Description
The impact of environmental pollution on productivity is analyzed in a dynamic two commodity model consisting of a formal sector and an informal sector. Environmental quality and public infrastructural expenditure affect productivity of private inputs in both sectors. Both the sectors pollute environment and receive the benefits of public expenditure on abatement and infrastructure but the burden of tax is imposed only on the formal sector. Properties of the steady-state growth equilibrium and of the second-best optimum fiscal policy are analyzed. The socially optimal relative size of the informal sector is less than its second-best optimal relative size in the decentralized competitive equilibrium.
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http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/27193/1/HJeco0560100730.pdf

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