Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/237712 
Year of Publication: 
2021
Series/Report no.: 
ECB Working Paper No. 2573
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
We study the interaction between monetary and fiscal policies in a Ramsey-Sidrauski model augmented with environmental capital. Equilibrium solutions are studied through the "Green Golden Rule". Despite the non-separability of money in utility and intertemporally nonseparable preferences, money is environmentally neutral. Policy impacts the environment via the marginal rate of transformation rather than the marginal rate of substitution between consumption and environment. Fiscal policies, lump sum and distortionary, under a balanced budget, are also environmentally non-neutral. Only under a non-balanced budget, when deficits are monetized, is money environmentally non-neutral. In alternative approaches (Cash-in- Advance, Transactions Costs), money is environmentally non-neutral.
Subjects: 
Ramsey-Sidrauski
Green Golden Rule
Environmental Capital
Chichilnisky et al. Conjecture
Cash in Advance
Transactions Costs
Friedman rule
JEL: 
E52
E62
H23
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4759-6
Document Type: 
Working Paper

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