Environment, Life Expectancy and Economic Development: The Optimal Environmental Tax

Abstract

Abstract:

China suffers double pressure from environmental protection and economic development. Environmental policies that take economic development into consideration are very important. Introducing the relationship between environment and life expectancy into the endogenous mortality two-period overlapping generation model, we build an endogenous economics model with environment and life expectancy. Solving the model, we obtain the economic growth path considering the environmental tax, with which the optimal environmental tax is further discussed. Employing the data in China, the simulations show that:there is an optimal environmental tax which maximizes the steady output. Besides, the implementation of environmental tax system will lead to economic recession in the short term. Our novelty is that we take the relationship between environment and life expectancy into consideration when studying environmental tax, and solving an optimal environmental tax which gives consideration to both environmental protection and economic development.

Key words: OLG model, optimal environmental tax, economic development, environment, life expectancy

Liao Pu, Zheng Sujin. Environment, Life Expectancy and Economic Development: The Optimal Environmental Tax[J]. , 2016, 28(10): 39-49.

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