Time Inconsistency in Environmental Policy

Tax Earmarking as a Commitment Solution

Datos Bibliográficos

ID9710709
AutoresLaura Marsiliani (0000-0002-3802-074X, Tilburg University), Thomas I Renstrom (0000-0002-2898-2507, Tilburg University)
Año2000
Volumen110
Número462
PáginasC123-C138
Fecha de publicación2000-03-01
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaThe Economic Journal (JOURNAL)
Identificadores de la revistaISSN: 0013-0133 • E-ISSN: 1468-0297
EditorialOxford University Press (OUP) (PUBLISHER)
DOI10.1111/1468-0297.00525
OpenAlexW3123460466
IdiomaEN
Citas recibidas7
Referencias citadas5

Tax earmarking imposes a constraint on government policymaking, and may be desirable if it solves a time‐inconsistency problem in tax policy. In a two‐period economy, in which the policy decisions regarding taxes, public goods provision, and pollution abatement are taken by a majority‐elected individual, we show how the time‐inconsistency problem in environmental policy arises. We demonstrate that the commitment equilibrium under no earmarking rules cannot be as fully implemented as a no‐commitment equilibrium under earmarking rules. However, the earmarking rules do act as a partial commitment mechanism

Constraint (computer-aided design · Dynamic inconsistency · Economics · Environmental economics · Environmental policy · Environmental tax · Government (linguistics · Microeconomics · Public economics · Public good · Tax policy · Tax reform · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization · Taxation and Compliance Studies