Joint Program on the Science and Policy of Global
Cambridge, MA 02139
Institutional Affiliation: Massachusetts Institute of Technology
NBER Working Papers and Publications
|August 2002||Tax Distortions and Global Climate Policy|
with Gilbert E. Metcalf, John Reilly: w9136
We consider the efficiency implications of policies to reduce global carbon emissions in a world with pre-existing tax distortions. We first note that the weak double-dividend, the proposition that the welfare improvement from a tax reform where environmental taxes are used to lower distorting taxes must be greater than the welfare improvement from a reform where the environmental taxes are returned in a lump sum fashion, need not hold in a world with multiple distortions. We then present a large-scale computable general equilibrium model of the world economy with distortionary taxation. We use this model to evaluate a number of policies to reduce carbon emissions. We find that the weak double dividend is not obtained in a number of European countries. Results also demonstrate the point th...
Published: Babiker, Mustafa H., Gilbert E. Metcalf and John Reilly. "Tax Distortions And Global Climate Policy," Journal of Environmental Economics and Management, 2003, v46(2,Sep), 269-287. citation courtesy of