Is habitual consumption harmful to the environment?

This paper explores the theoretical linkage between habit and the environment through environmentally harmful consumption affected by habitual behavior. It is shown that habit formation of consumption has both negative and positive effects on environmental quality. Whether the positive effect dominates the negative one depends on the degrees of habit formation and environmental externalities.environmental quality

The Effects of Emission Permits on Growth and the Environment

We develop an overlapping generations model of growth and the environment in which industrial firms produce environmentally harmful emissions. A government controls the emissions by assigning emission quotas to firms, and permits could be issued and freely traded as financial instruments across firms on the basis of the quotas. We show that an environmental policy that decreases an aggregate number of emission quotas could degenerate economic growth and lower environmental quality in the long run. We also show the implications of this result for environmental policy.Emission permit, Economic growth, Environmental quality, Overlapping generations

Social Security Policy with Public Debt in an Aging Economy

This paper analyzes a social security policy with public debt in an overlapping generations growth model. In particular, the paper considers a situation in which population aging causes a heavy burden of social security payments where public debt is issued by the government to finance the payment. In the model presented below, an economy with an aging population may achieve two dynamically inefficient equilibria. Under certain conditions, the effects of pension reform and population aging on capital accumulation are entirely different between the two equilibria.Population aging, Social security, Pension reform, Public debt, Economic growth, Overlapping generations

Sustainable Development in an Aging Economy

In this paper, we analyze the effects of population aging on economic growth and the environment in a two-period overlapping generations model of growth, aging, and the environment. We show that aging may be beneficial to economic growth and the environment under perfect annuitisation, while possibly harmful under imperfect annuitisation. We also discuss the implications of our results for environmental policy in an aging economy.Population Aging, Overlapping Generations, Economic Growth, Sustainable Development, Environmental Externalities

Dynamic political economy of redistribution policy: the role of education costs

This paper focuses on how education costs affect the political determination of redistribution policy via individual decision making on education. For cases of high costs, there are multiple equilibria: the poor-majority equilibrium featured by the minority of highly educated individuals and a high level of redistribution, and the rich-majority equilibrium featured by the majority of highly educated individuals and a low level of redistribution. For cases of low costs, there is a unique rich-majority equilibrium featured by the majority of highly educated individuals and a high level of redistribution.

Dynamic Political Economy of Redistribution Policy: The Role of Education Costs

This paper focuses on how education costs affect the political determination of redistribution policy via individual decision-making on education. For cases of high costs, there are multiple equilibria: the high-tax equilibrium featured by the minority of highly educated individuals and a large size of the government, and the low-tax equilibrium featured by the majority of highly educated individuals and a small size of the government. For cases of low costs, there is a unique equilibrium featured by the majority of highly educated individuals and a large size of the government.Markov perfect equilibrium; Dynamic political economy; Redistribution policy; Education costs

Inequality, Mobility and Redistributive Politics

This paper develops a model where income inequality and intergenerational mo- bility are jointly determined via redistributive politics. The model includes two key factors: accessibility of tertiary education for poor-born agents and multiple self- ful?lling expectations of agents. Given these factors, the model provides predictions of cross-country differences in inequality and mobility consistent with empirical ob- servations.Inequality; Inequality; Intergenerational mobility; Redistribution; Markov per- fect political equilibrium; Overlapping generations

A Political Economy Theory of Government Debt and Social Security

This paper analyzes the determinants of government debt and social security for the old in a closed-economy, overlapping-generation model. Under the probabilistic voting, the model presents (i) an intergenerational link of resource allocation via debt and social security; (ii) multiple political equilibria; and (iii) a negative cor- relation between tax and debt. These three results are robust to the introduction of public goods as an alternative government expenditure or to the introduction of income heterogeneity within a generation.Government debt; Social security; Overlapping generations; Proba- bilistic voting

Lender Liability for Environmental Risk Revisited

There have been opposing conclusions in the literature as to whether lender liability increases the probability of environmentally harmful accidents. This paper shows that s multiplicity of equilibria is the key to solve such contradictory conclusions.Environmental Risk, Lender Liability

Aging, Inequality and Social Security

This paper develops an overlapping-generations model including wage inequality within a generation and intra- and intergenerational resource reallocation via social security. Based on the concept of a stationary Markov perfect equilibrium, the paper focuses on the feedback mechanism between current individualsf decisions on saving and future voting on social security. The paper demonstrates the determination of social security via probabilistic voting and its consequence for consumption inequality within a generation. It is shown that when the elderly are politically powerful, (i) the economy attains an oscillatory path of inequality and social security, and (ii) aging may reduce consumption inequality.Aging; Inequality; Social security; Political Economy; Stationary Markov Perfect Equilibrium