Performing an Environmental Tax Reform in a Regional Economy. A Computable General Equilibrium Approach
AbstractWe use a Computable General Equilibrium model to simulate the effects of an Environmental Tax Reform in a regional economy (Andalusia, Spain). The reform involves imposing a tax on CO2 or SO2 emissions and reducing either the Income Tax or the payroll tax of employers to Social Security, and eventually keeping public deficit unchanged. This approach enables us to test the so-called double dividend hypothesis, which states that this kind of reform is likely to improve both environmental and non-environmental welfare. In the economy under analysis, an employment double dividend arises when the payroll tax is reduced and, if CO2 emissions are selected as environmental target, a (limited) strong double could also be obtained. No double dividend appears when Income Tax is reduced to compensate the environmental tax.
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Bibliographic InfoPaper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/04.
Length: 42 pages
Date of creation: 2004
Date of revision:
environmental tax reform; computable general equilibrium; double dividend.;
Other versions of this item:
- Francisco André & M. Cardenete & Esther Velázquez, 2005. "Performing an environmental tax reform in a regional economy. A computable general equilibrium approach," The Annals of Regional Science, Springer, vol. 39(2), pages 375-392, 06.
- Francisco J. AndrÃ© & M. Alejandro Cardenete, 2004. "Performing an Environmental Tax Reform in a Regional Economy: A Computable General Equilibrium Approach," Computing in Economics and Finance 2004 115, Society for Computational Economics.
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-03-07 (All new papers)
- NEP-MIC-2004-03-07 (Microeconomics)
- NEP-PBE-2004-03-07 (Public Economics)
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