Recycling CO2 Tax Revenue and the Carbon Dividend: A Guide to the Literature

Lea Fricke (), Clemens Fuest () and Dominik Sachs ()
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Lea Fricke: University of St Gallen and ifo Institute
Clemens Fuest: ifo Institute and University of Munich
Dominik Sachs: University of St Gallen and ifo Institute

Hacienda Pública Española / Review of Public Economics, 2025, vol. 254, issue 3, 45-57

Abstract: This paper discusses the seemingly contradicting implications of the carbon dividend concept and the double dividend idea for the use of revenue from carbon pricing. We provide an introduction to a number of key contributions to this debate in the literature and explain how their findings and results can be reconciled. Some existing studies on the effects of revenue recycling through the carbon tax may be too optimistic regarding the impact because they neglect the interaction between the carbon dividend, labour supply, and the rest of the tax system.

Keywords: Corruption; Public spending; Sustainable development; MMQR (search for similar items in EconPapers)
JEL-codes: H50 Q48 Q56 (search for similar items in EconPapers)
Date: 2025
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