Green Transition: Essays in Environmental Economics

This thesis studies the relationship between environmental sustainability, inequality, and macroeconomic policy within overlapping generations (OLG) models. Across three essays, I examine how fiscal and monetary instruments can be designed to reduce pollution and inequality while maintaining macroeconomic stability. The first chapter, "Environmental Inequalities and the Role of the Carbon Tax," examines the relationship between environmental externalities and social inequality when individuals have different levels of human capital and face different liquidity constraints. Individuals invest in mitigation and adaptation technologies, and heterogeneous adaptation capacity contributes to persistent environmental inequalities. Fiscal and monetary policies affect the long-run equilibrium jointly, and I identify policy combinations that decentralize Pareto-optimal allocations, reconciling equity and sustainability. The second chapter, "Environmental Fiscal Policy and Optimal Labor Allocation in a Two-Sector Model," analyzes how fiscal instruments influence the allocation of labor between "green" and "brown" sectors. The model shows that laissez-faire equilibria are suboptimal and generate excessive pollution. By adjusting the debt-to-capital ratio and public spending, the government can induce a more sustainable allocation of resources and achieve socially optimal outcomes. The third chapter, "The Role of Monetary and Fiscal Policy in Environmental Goals," focuses on coordination between fiscal and monetary authorities. Within a framework with a partial cash-in-advance constraint, I examine how monetary rules and public debt dynamics influence environmental and macroeconomic outcomes. The analysis reveals that long-run equilibrium critically depends on fiscal parameters and the degree of central bank independence. Overall, this thesis emphasizes the importance of coordinated fiscal and monetary strategies for achieving balanced growth, equality, and environmental sustainability.