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A Note on Weak Double Dividends

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Author Info

  • Mustafa H. Babiker
  • Gilbert Metcalf
  • John Reilly

Abstract

A weak double-dividend is 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. A general consensus has emerged that the weak double-dividend is an uncontroversial idea. We show in this note that a weak double-dividend need not hold in a world with multiple distortions.

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Bibliographic Info

Paper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0307.

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Date of creation: 2003
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Handle: RePEc:tuf:tuftec:0307

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Keywords: environmental tax policy; second-best taxation; general equilibrium analysis;

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Cited by:
  1. Takeda, Shiro, 2007. "The double dividend from carbon regulations in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 21(3), pages 336-364, September.
  2. Gilbert E. Metcalf & Sergey Paltsev & John Reilly & Henry Jacoby & Jennifer F. Holak, 2008. "Analysis of U.S. Greenhouse Gas Tax Proposals," NBER Working Papers 13980, National Bureau of Economic Research, Inc.

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