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The Macroeconomic Effects of Environmental Taxes: A Closer Look at the Feasibility of “Win-Win” Outcomes
Author:
Ms. Jenny E Ligthart
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Series:
IMF Working Papers
Volume/Issue:
Volume 1998: Issue 075
Language:
English
Publication Date:
01 May 1998
DOI:
https://doi.org/10.5089/9781451849707.001
ISBN:
9781451849707
ISSN:
1018-5941
Pages:
35
Keywords:
WP; renewable resource; Pigovian tax; public spending; employment dividend; diminishing returns; terms of trade; Abatement; environmental taxes; double dividend; endogenous growth; green tax reform; optimal taxation; pollution.; physical capital; rate of economic growth; public goods; market economy; Environmental policy; Natural resources; Labor taxes
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper reviews recent literature on the macroeconomic effects of environmental taxes. It attempts to delineate the conditions under which a cleaner environment is compatible with attaining macroeconomic objectives, such as more employment and economic growth. The analysis reveals that an environmentally motivated fiscal reform—using the revenues from environmental taxes to cut labor taxes—may yield employment and environmental dividends if the tax burden can be shifted to agents outside the labor market, such as capitalists, transfer recipients, and foreigners. A cleaner environment and a higher rate of economic growth go hand in hand if the environment is considered an important public input into production.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 1998: Issue 075