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Foreign aid and oil taxes: helping the poor in oil-rich countries

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  • Berlinschi, Ruxanda
  • Daubanes, Julien

Abstract

This paper proposes a theoretical analysis of the joint impact of foreign aid and oil taxes on the revenues of a rich oil importing country (North) and a two-class, oil exporting country (South). Without coordination, oil taxes are strictly higher in the North and the global allocation of oil is inefficient. Moreover, oil taxes in the North extract some of the South's oil rents, undoing the revenue transfers from foreign aid. We show that a policy coordination mechanism reduces inefficiencies and improves global welfare.

Suggested Citation

  • Berlinschi, Ruxanda & Daubanes, Julien, 2012. "Foreign aid and oil taxes: helping the poor in oil-rich countries," Environment and Development Economics, Cambridge University Press, vol. 17(03), pages 249-268, June.
  • Handle: RePEc:cup:endeec:v:17:y:2012:i:03:p:249-268_00
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    Cited by:

    1. Lucas Bretschger & Nujin Suphaphiphat, 2012. "Use Less, Pay More: Can Climate Policy Address the Unfortunate Event for Being Poor?," CEEES Paper Series CE3S-04/12, European University at St. Petersburg, Department of Economics.
    2. Tapan Sarker, 2013. "Taxing for the future: an intergenerational perspective," Chapters,in: The Asian Century, Sustainable Growth and Climate Change, chapter 4, pages 85-110 Edward Elgar Publishing.
    3. Bretschger, Lucas & Suphaphiphat, Nujin, 2014. "Effective climate policies in a dynamic North–South model," European Economic Review, Elsevier, vol. 69(C), pages 59-77.

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