Effectiveness of carbon tax on emission reduction in Sweden and Norway. A cross-country VAR analysis

Prince Anienwe and Keshab Bhattarai

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the comparative effectiveness of carbon taxation policies in Sweden and Norway using the Vector Autoregression (VAR) methodology, spanning the period from 1995 to 2023. Employing impulse responses in VAR analysis, this study confirms the effectiveness of the carbon tax in Sweden, with significant lagged effects, but finds weaker policy transmission mechanisms in Norway, identifying systematic relationships between policy changes and environmental outcomes. This study contributes to the literature on climate policy design by comparing empirical evidence on optimal carbon pricing mechanisms across these two economies. In addition, the study shows how carbon tax design and implementation contexts critically determine policy effectiveness in temporal response patterns of emissions to carbon tax policies.

Keywords: Carbon tax; Emission reduction; VAR analysis; Climate policy; Cross-country comparison. (search for similar items in EconPapers)
JEL-codes: H2 O5 Q5 (search for similar items in EconPapers)
Date: 2026-01-13, Revised 2026-01-13
New Economics Papers: this item is included in nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:127740

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