Carbon Taxes in Theory and Practice

Gilbert Metcalf

Annual Review of Resource Economics, 2021, vol. 13, issue 1, 245-265

Abstract: As of 2020, carbon taxes were in effect in 30 jurisdictions around the world. This article provides a theoretical overview of carbon taxes along with some empirical evidence on the macroeconomic impacts of existing taxes, including emission reductions. It compares and contrasts carbon taxes with other policy instruments to reduce emissions. It also highlights issues that have recently attracted the attention of researchers on which additional research would be beneficial. Those include (a) the role of border adjustments in a unilaterally imposed carbon tax, (b) hybrid carbon tax systems that increase the likelihood of hitting desired emission reduction targets, (c) the optimal price path for a carbon tax, and (d) the growing empirical literature on the economic impact of carbon taxes.

Keywords: climate change; greenhouse gas emissions; carbon tax; climate policy (search for similar items in EconPapers)
JEL-codes: H23 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (13)

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DOI: 10.1146/annurev-resource-102519-113630

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