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

May 1, 1998

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Ved P. Gandhi, and Javier Cuervo. Carbon Taxes: Their Macroeconomic Effects and Prospects for Global Adoption: A Survey of the Literature, (USA: International Monetary Fund, 1998) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Carbon tax, Climate change, Environment, Greenhouse gas emissions, Revenue administration, Taxes

Keywords: Abatement cost, Adoption of carbon taxes, Air pollution, Carbon tax, Carbon tax revenue, Carbon tax tax revenue, Climate change, Cost increase, Distortionary tax, Double dividend, Economic growth, Effect of a carbon tax, Energy firm, Europe, Global, Global warming, Greenhouse gas, Greenhouse gas emissions, Heating cost, Income distribution, International competitiveness, Kyoto protocol, Market clearing price, Polluting firm, Reducing Co, Tax-cum-wage subsidy, WP

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/073
Stock No:

WPIEA0731998
ISBN:

9781451849431
ISSN:

1018-5941

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