A time-varying carbon tax to protect the environment while safeguarding the economy

Ivan Jaccard

Research Bulletin, 2021, vol. 86

Abstract: Climate change is one of the most pressing issues of our time. The challenge for policymakers is that climate policies could have a negative impact on the economy in the short term. In this article we discuss how this trade-off between fighting climate change and ensuring a stable business cycle affects the design of environmental policies. We argue in favour of a time-varying carbon tax that is increased during booms and decreased during recessions. JEL Classification: Q58, G12, E32

Keywords: Asset Pricing; Climate Policies; Optimal Taxation (search for similar items in EconPapers)
Date: 2021-07
Note: 737337
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