Dynamic Environmental Policy in Developing Countries in the Presence of a Balance of Trade Deficit and a Tariff

35 Pages Posted: 27 Mar 2000

See all articles by Amitrajeet A. Batabyal

Amitrajeet A. Batabyal

Rochester Institute of Technology (RIT) - Department of Economics

Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics

Dug Man Lee

Konkuk University

Multiple version iconThere are 2 versions of this paper

Abstract

We first review the literature relating to the protection of the modern sector in developing countries (DCs). We then discuss the connections between protection, economic dualism, and optimal environmental policy in DCs. Next, we construct an intertemporal model of the environmental policy formulation process in a stylized DC in which there is a balance of trade deficit, and a tariff that protects the modern --- also the import competing and the polluting --- sector. The employment and output effects of three different pollution taxes are examined. These taxes incorporate alternate assumptions about the DC government's ability to commit to its announced course of action. The taxes are described, the dependence of these taxes on the extant tariff is analyzed, and the conditions that call for an activist policy are specified. Our analysis shows that the time inconsistency of some optimal programs and the existence of the tariff can prevent the DC government from attaining its employment and environmental goals.

Keywords: Commitment, Developing Country, Environmental Policy, Tariff, Trade Deficit

JEL Classification: O20, Q20

Suggested Citation

Batabyal, Amitrajeet A. and Beladi, Hamid and Lee, Dug Man, Dynamic Environmental Policy in Developing Countries in the Presence of a Balance of Trade Deficit and a Tariff. Available at SSRN: https://ssrn.com/abstract=214850 or http://dx.doi.org/10.2139/ssrn.214850

Amitrajeet A. Batabyal (Contact Author)

Rochester Institute of Technology (RIT) - Department of Economics ( email )

92 Lomb Memorial Drive
Rochester, NY 14623-5604
United States
585-475-2805 (Phone)
585-475-5777 (Fax)

HOME PAGE: http://people.rit.edu/aabgsh

Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics ( email )

One UTSA Circle
P.O. Box 5636
San Antonio, TX 78249
United States
210-458-7038 (Phone)
210-458-7040 (Fax)

Dug Man Lee

Konkuk University ( email )

380-701 Chungju
Korea

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
239
Abstract Views
1,620
rank
157,281
PlumX Metrics