Carbon Taxes: Their Macroeconomic Effects and Prospects for Global Adoption: A Survey of the Literature

Ved Gandhi and Javier Cuervo

No 1998/073, IMF Working Papers from International Monetary Fund

Abstract: The carbon tax is a major instrument for curbing greenhouse gas emissions that cause global warming. Yet its adoption has been limited because of concerns over its effects on economic growth, income distribution, and international competitiveness. The paper shows that policymakers can minimize the effects of the tax on economic growth through an efficient recycling of tax revenues and on equity through the adoption of appropriate mitigating or compensating measures. To eliminate the worry about the loss of competitiveness, the paper suggests an international agreement on a coordinated adoption of the tax.

Keywords: WP; polluting firm; reducing Co; economic growth; abatement cost; cost increase; energy firm; carbon tax; climate change; double dividend; greenhouse gas emissions; global warming; income distribution; international competitiveness; Kyoto protocol; carbon tax revenue; tax-cum-wage subsidy; air pollution; distortionary tax; adoption of carbon taxes; carbon tax tax revenue; greenhouse gas; market clearing price; heating cost; effect of a carbon tax; Global; Europe (search for similar items in EconPapers)
Pages: 39
Date: 1998-05-01
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Citations: View citations in EconPapers (4)

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