The Macroeconomic Impact of Europe's Carbon Taxes

Gilbert Metcalf and James H. Stock

American Economic Journal: Macroeconomics, 2023, vol. 15, issue 3, 265-86

Abstract: We estimate the macroeconomic impacts of carbon taxes on GDP and employment growth rates using 30 years of data on carbon taxation in various European countries. We find no evidence for a negative impact on employment or GDP growth but rather find a zero to modest positive impact. We also find a cumulative emissions reduction on the order of 4 to 6 percent for a $40/ton CO2 tax covering 30 percent of emissions. Reductions would likely be greater for a broad-based US carbon tax since European carbon taxes typically do not cover those sectors with the lowest marginal abatement costs.

JEL-codes: E23 E24 H23 Q54 Q58 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (16)

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Related works:
Working Paper: The Macroeconomic Impact of Europe’s Carbon Taxes (2020)
Working Paper: The Macroeconomic Impact of Europe's Carbon Taxes (2020)
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DOI: 10.1257/mac.20210052

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