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Socially responsible investment in an environmental overlapping generations model

One of the problems associated with the conservation of the environment is that short-lived individuals fail to account for the long-term effects of pollution, which implies that future generations bear the costs imposed by the current generation. Such intergenerational externalities are usually tackled by (Pigovian) taxes, fiscal policy or environmental regulation. Alternatively, we propose that socially responsible investment funds create a role for the stock market to deal with intergenerational environmental externalities. We analyze the role of the stock market in an environmental overlapping generations model of the Diamond-type, in which agents choose between investing in "clean" government bonds or "polluting" firm equity. We show that although socially responsible investors are short-lived, the forward-looking nature of stock prices can help to resolve the conflict between current and future generations. (C) 2010 Elsevier B.V. All rights reserved.
- University of Groningen Netherlands
Environmental quality, Stock market, Socially responsible investment, CORPORATE, CONSUMERS, Overlapping generations, POLICY, WARM-GLOW, Sustainability, POLLUTION, Very Good, GROWTH, Corporate social responsibility
Environmental quality, Stock market, Socially responsible investment, CORPORATE, CONSUMERS, Overlapping generations, POLICY, WARM-GLOW, Sustainability, POLLUTION, Very Good, GROWTH, Corporate social responsibility
citations This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).15 popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.Top 10% influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).Average impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.Average
