Optimal Oil Taxation in a Small Open Economy
AbstractThe international oil market has been very volatile over the past three decades. In industrialized economies, especially in Europe, taxes represent a large fraction of oil prices and governments do not seem to react to oil price shocks by using oil taxes strategically. The aim of this paper is to analyze optimal oil taxation in a dynamic stochastic general equilibrium model of a small open economy that imports oil. We find that in general it is not optimal to distort the oil price paid by firms with taxes, neither in the long run nor over the business cycle. The general result could be reversed depending on environmental considerations and available fiscal instruments. We provide simulations to illustrate the optimal response to shocks in such cases. (Copyright: Elsevier)
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Bibliographic InfoArticle provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.
Volume (Year): 9 (2006)
Issue (Month): 3 (July)
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Other versions of this item:
- Carlos de Miguel & Baltasar Manzano, . "Optimal Oil Taxation in a Small Open Economy," Working Papers on International Economics and Finance 02-03, FEDEA.
- Carlos de Miguel & Baltasar Manzano, 2002. "Optimal Oil Taxation in a Small Open Economy," Working Papers 02-03, Asociación Española de Economía y Finanzas Internacionales.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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