Short and Long-term Effects of Environmental Tax Reform

Walid Oueslati

No 2013.09, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper examines the macroeconomic effects of an environmental tax reform in a growing economy. A model of endogenous growth based on human capital accumulation is used to numerically simulate the growth effects of different environmental tax reforms and compute their impact on welfare in the short and the long-term. Our results suggest that the magnitude of these effects depends on the type of tax reform. Thus, only environmental tax reform that aims to use the revenue from environmental tax to reduce wage tax and increase the proportion of public spending within GDP, enhances both growth and welfare in the long-term. However, the short-term effect remains negative.

Keywords: Tax reform; Endogenous Growth; Human Capital; Environmental Externality; Transitional Dynamics; Welfare cost (search for similar items in EconPapers)
JEL-codes: D62 E62 H22 I21 O41 Q28 (search for similar items in EconPapers)
Date: 2013-01
New Economics Papers: this item is included in nep-acc, nep-dge, nep-env, nep-fdg, nep-mac, nep-pbe and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Short and Long-term Effects of Environmental Tax Reform (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2013.09

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