Taxation, Unemployment, and Growth: Dynamic Welfare Effects of “Green” Policies

Abstract

Abstract:This paper analyses the effects of so-called "green" tax reforms on a small, open economy producing an imperfect substitute for foreign goods, using an intertemporal general equilibrium mo del The labour market is characterised by union wage setting, and a fixed exchange rate implies wage rigidity and involuntary unemployment. The long run effects on instantaneous utility, employment and the stock of real and financial capital of a revenue neutral increase in the tax on fossil fuels combined with a) lump sum rebating or b) change in the labour income tax rate, are discussed. Due to the changes in instantaneous utility during the time path following the implementation of the tax reform. the total welfare effect may be positive even with a reduction in long run consumption. The total welfare effect is in general more positive (or less negative) with wage tax reduction than lump-sum rebating

The Tax Burden on Wastewater and the Protection of Water Ecosystems in EU Countries

“…As societies develop economically, citizens seek higher quality, healthier living conditions, and are willing to bear the fiscal costs associated with environmental protection [18]. In other cases, however, environmental taxes are believed to have a possible inflationary effect, acting as an indirect tariff, and negatively affecting the competitiveness of the productive structures in the countries that apply these taxes [19]. Furthermore, less stringent environmental standards can help generate growth by attracting multinational companies in highly-polluting sectors [20].…”

Driving forces behind the environmental pressure in Nordic countries - comparative decomposition analyses

“…Heide et al (2004) gives a documen-tation of the model, while Strøm (2000) describes the emission module in detail. For applications to environmental policy analyses, see Bruvoll and Faehn (2006), Bruvoll and Faehn (2004), Bruvoll and Larsen (2004), Bruvoll, Faehn and Strøm (2003), Bye and Nyborg (2003), Faehn and Holmøy (2003), Bye (2002), Strøm (2001), and Bye (2000).…”

Forest Taxes, Timber Concessions, and Policy Choices in the Amazon

“…The second best tax choice is one that raises revenues in an efficient manner, because not only is a potential market failure corrected, but these taxes can be used elsewhere in the economy to offset other taxes (thereby increasing welfare), although it is important to note that standard opinion of good tax practice avoids "earmarking" funds for particular projects (Schob, 1996;De Mooij and Bovenberg, 1998;Ligthart and Van der Ploeg, 1999;Brett and Keen, 2000;Bye, 2002). The use of tax income from one source to offset another is known as the double dividend effect (e.g., see Pezzey and Park, 1998;Bosquet, 2000;Parry and Bento, 2000;Parry and Oates, 2000;Schwatrz and Repetto, 2000;Bosello et al, 2001).…”