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Environmental tax reform and endogenous growth
Bovenberg,A.L. de Mooij,R.A.
Bovenberg,A.L.
de Mooij,R.A.
Abstract
This paper explores the effects of an environmental tax reform on pollution, economic growth and welfare in an endogenous growth model with pre-existing tax distortions. We find that a shift in the tax mix away from output towards pollution may raise economic growth through two channels. The first channel is an environmental production externality, which determines the positive effect of lower aggregate pollution on the productivity of capital. The second channel is a shift in the tax burden away from the net return on investment towards profits. The paper also shows that, if tax shifting towards profits is large and environmental amenities are unimportant, the optimal tax on pollution may exceed its Pigovian level.
Description
Pagination: 23, [14]
Date
1994
Journal Title
Journal ISSN
Volume Title
Publisher
Unknown Publisher
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Research Projects
Organizational Units
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Keywords
Growth Models, Pollution, Tax Reform, Environmental Tax, environmental economics, SDG 8 - Decent Work and Economic Growth
Citation
Bovenberg, A L & de Mooij, R A 1994 'Environmental tax reform and endogenous growth' CentER Discussion Paper, vol. 1994-98, Unknown Publisher.