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Double dividend of climate protection and the role of international policy coordination in the EU: an applied general equilibrium analysis with the GEM-E3 model

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  • Conrad, Klaus
  • Schmidt, Tobias F. N.
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    Abstract

    While there is some hope that the ongoing climate change negotiations will soon come up with concrete, time scheduled and binding emission reduction commitments, the question of how to achieve these targets is still unsolved. The objective of this paper is to analyse alternative settings of an environmental tax reform and its economic and environmental impacts on the EU. The methodological framework used is based on a multi-country and multi-sectoral computable general equilibrium model for eleven EU-member states. The emphasis of the analysis lies on the institutional setting of a carbon dioxide reduction policy and on the specification of the labour market. The institutional settings analysed are related to the degree of environmental policy coordination. As standard neo-classics neglegt the problem of unvoluntary unemployment, we relax this restriction in the second part of the analysis in order to test alternative (more rigid) labour market specifications. The major findings of the paper can be summarized as follows: 1) There is some potential for a double dividend in the EU. 2) Coordination beats not always unilateral actions. 3) Labour market rigidities play a crucial role to both, the double dividend and the coordination issue. --

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    Bibliographic Info

    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 97-26.

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    Date of creation: 1997
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    Handle: RePEc:zbw:zewdip:5129

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    1. Bovenberg, A.L. & Ploeg, F. van der, 1994. "Green policies in a small open economy," Open Access publications from Tilburg University urn:nbn:nl:ui:12-152986, Tilburg University.
    2. Jean-Marc Burniaux & John P. Martin & Giuseppe Nicoletti & Joaquim Oliveira Martins, 1991. "GREEN - - A Multi-Region Dynamic General Equilibrium Model for Quantifying the Costs of Curbing CO2 Emissions: A Technical Manual," OECD Economics Department Working Papers 104, OECD Publishing.
    3. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-65, September.
    4. Reinert, Kenneth A. & Roland-Holst, David W., 1992. "Armington elasticities for United States manufacturing sectors," Journal of Policy Modeling, Elsevier, vol. 14(5), pages 631-639, October.
    5. Revesz, Richard L. & Stavins, Robert N., 2007. "Environmental Law," Handbook of Law and Economics, Elsevier.
    6. Bovenberg, A.L. & Mooij, R.A. de, 1994. "Environmental taxes and labor-market distortions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-148753, Tilburg University.
    7. Rüdiger Pethig, 1996. "Ecological Tax Reform and Efficiency of Taxation: A Public Good Perspective," Volkswirtschaftliche Diskussionsbeiträge 57-96, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    8. Dean, Judith M., 1992. "Trade and the environment : a survey of the literature," Policy Research Working Paper Series 966, The World Bank.
    9. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    10. de Bovenberg, A Lans & Mooij, Ruud A, 1994. "Environmental Levies and Distortionary Taxation," American Economic Review, American Economic Association, vol. 84(4), pages 1085-89, September.
    11. Jorgenson, Dale W. & Wilcoxen, Peter J., 1993. "Energy the environment, and economic growth," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 27, pages 1267-1349 Elsevier.
    12. Heinz Welsch, 1996. "Recycling of carbon/energy taxes and the labor market," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 8(2), pages 141-155, September.
    13. Hazilla, Michael & Kopp, Raymond J, 1990. "Social Cost of Environmental Quality Regulations: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 853-73, August.
    14. Carlo Perroni & Randall M. Wigle, 1994. "International Trade and Environmental Quality: How Important Are the Linkages?," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 551-67, August.
    15. Bergman, Lars, 1990. "Energy and environmental constraints on growth: A CGE modeling approach," Journal of Policy Modeling, Elsevier, vol. 12(4), pages 671-691.
    16. Manne, Alan & Mendelsohn, Robert & Richels, Richard, 1995. "MERGE : A model for evaluating regional and global effects of GHG reduction policies," Energy Policy, Elsevier, vol. 23(1), pages 17-34, January.
    17. Bovenberg, A Lans & van der Ploeg, Frederick, 1994. " Green Policies and Public Finance in a Small Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(3), pages 343-63.
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    Cited by:
    1. Schmidt, Tobias F. N. & Koschel, Henrike, 1998. "Climate change policy and burden sharing in the European Union: applying alternative equity rules to a CGE-framework," ZEW Discussion Papers 98-12, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Bosello, Francesco & Carraro, Carlo & Galeotti, Marzio, 1999. "The Double Dividend Issue: Modelling Strategies and Empirical Findings," CEPR Discussion Papers 2117, C.E.P.R. Discussion Papers.
    3. Buscher, Herbert S. & Buslei, Hermann & Goggelmann, Klaus & Koschel, Henrike & Schmidt, Tobias F. N. & Steiner, Viktor & Winker, Peter, 2001. "Empirical macro models under test. A comparative simulation study of the employment effects of a revenue neutral cut in social security contributions," Economic Modelling, Elsevier, vol. 18(3), pages 455-474, August.
    4. Schmidt, Tobias F. N. & Koschel, Henrike, 1998. "Modelling of foreign trade in applied general equilibrium models: theoretical approaches and sensitivity analysis with the GEM-E3 model," ZEW Discussion Papers 98-08, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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