2026-04-28T12:23:37Zhttps://uvadoc.uva.es/oai/requestoai:uvadoc.uva.es:10324/410092025-03-26T19:10:03Zcom_10324_1146com_10324_931com_10324_894col_10324_1262
UVaDOC
author
Cabo García, Francisco José
author
Martín Herrán, Guiomar
author
Martínez García, María Pilar
2020-06-09T05:44:38Z
2020-06-09T05:44:38Z
2020
Environmental and Resource Economics, 2020, en prensa
http://uvadoc.uva.es/handle/10324/41009
10.1007/s10640-020-00430-3
Environmental and Resource Economics
We analyze the effect of non-constant discounting on economic growth and social welfare in an endogenous growth model with pollution externalities. For time-consistent agents, who play a game against their future selves, the balanced growth equilibrium is compared to the case of standard exponential discounting. A decaying instantaneous discount rate leads to slower growth in a centralized economy, while its effect for a competitive economy is ambiguous. Interestingly, when comparing the planned and the competitive equilibria, the assumption of non-constant discounting may imply greater social welfare in the market equilibrium under two conditions. First, the pollution externality on utility must be large with respect to the externality on production, so that the central planner slows down growth below the growth rate in the market economy. Secondly, individuals’ degree of impatience should decrease sharply with the time distance from the present. Concerning policy implications, we observe that under log-utility policies may not be necessary, while for an isoelastic utility with an elasticity lower than one, introducing policy instruments is less effective than under constant discounting.
eng
Non-constant Discounting, Social Welfare and Endogenous Growth with Pollution Externalities
info:eu-repo/semantics/article
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URL
https://uvadoc.uva.es/bitstream/10324/41009/1/Final_version_repository.pdf
File
MD5
e559ae6a7b5f3bc2f29baa0e78ec6544
421509
application/pdf
Final_version_repository.pdf