NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Mustafa Babiker

MIT
Joint Program on the Science and Policy of Global
Cambridge, MA 02139

NBER Working Papers and Publications

August 2002Tax Distortions and Global Climate Policy
with Gilbert E. Metcalf, John Reilly: w9136
We consider the efficiency implications of policies to reduce global carbon emissions in a world with pre-existing tax distortions. We first note that the weak double-dividend, the proposition that the welfare improvement from a tax reform where environmental taxes are used to lower distorting taxes must be greater than the welfare improvement from a reform where the environmental taxes are returned in a lump sum fashion, need not hold in a world with multiple distortions. We then present a large-scale computable general equilibrium model of the world economy with distortionary taxation. We use this model to evaluate a number of policies to reduce carbon emissions. We find that the weak double dividend is not obtained in a number of European countries. Results also demonstrate the point th...

Published: Babiker, Mustafa H., Gilbert E. Metcalf and John Reilly. "Tax Distortions And Global Climate Policy," Journal of Environmental Economics and Management, 2003, v46(2,Sep), 269-287. citation courtesy of

 
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