The Macroeconomic Effects of Environmental Taxes: A Closer Look at the Feasibility of “Win-Win” Outcomes

May 1, 1998

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Format: Chicago

Jenny E Ligthart. The Macroeconomic Effects of Environmental Taxes: A Closer Look at the Feasibility of “Win-Win” Outcomes, (USA: International Monetary Fund, 1998) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Environment, Environmental policy, Environmental taxes, Labor taxes, Natural resources, Taxes

Keywords: Abatement, Diminishing returns, Double dividend, Employment dividend, Endogenous growth, Environmental policy, Environmental taxes, Green tax reform, Labor taxes, Market economy, Natural resources, Optimal taxation, Physical capital, Pigovian tax, Pollution., Public goods, Public spending, Rate of economic growth, Renewable resource, Terms of trade, WP

Publication Details

Pages:

35
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/075
Stock No:

WPIEA0751998
ISBN:

9781451849707
ISSN:

1018-5941

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