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Are Carbon Taxes Good for the Poor? A General Equilibrium Analysis for Vietnam

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  • Coxhead, Ian
  • Wattanakuljarus, Anan
  • Nguyen, Chan V.

Abstract

We evaluate effects of an environmental tax using a general equilibrium model linked to a household database. The burden of the tax, applied mainly to energy, is passed forward by non-tradable industries and backward by tradable industries facing fixed world prices. The tax is thus equivalent to a real exchange rate appreciation, and since export industries are labor-intensive, reduces employment, and increases poverty, especially when labor supply is responsive to wages. The use of revenues to increase transfers to households can offset poverty increases, but does not create jobs; thus the tax will likely conflict with other development policy objectives.

Suggested Citation

  • Coxhead, Ian & Wattanakuljarus, Anan & Nguyen, Chan V., 2013. "Are Carbon Taxes Good for the Poor? A General Equilibrium Analysis for Vietnam," World Development, Elsevier, vol. 51(C), pages 119-131.
  • Handle: RePEc:eee:wdevel:v:51:y:2013:i:c:p:119-131
    DOI: 10.1016/j.worlddev.2013.05.013
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    References listed on IDEAS

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    Cited by:

    1. van Ruijven, Bas J. & O’Neill, Brian C. & Chateau, Jean, 2015. "Methods for including income distribution in global CGE models for long-term climate change research," Energy Economics, Elsevier, vol. 51(C), pages 530-543.
    2. repec:eee:enepol:v:123:y:2018:i:c:p:471-481 is not listed on IDEAS
    3. Ditya A Nurdianto & Budy P Resosudarmo, 2014. "ASEAN Economic community and climate change," Departmental Working Papers 2014-24, The Australian National University, Arndt-Corden Department of Economics.
    4. Michael Jakob & Jérôme Hilaire, 2015. "Using importers’ windfall savings from oil subsidy reform to enhance international cooperation on climate policies," Climatic Change, Springer, vol. 131(4), pages 465-472, August.
    5. repec:eee:ecmode:v:75:y:2018:i:c:p:169-180 is not listed on IDEAS
    6. Lorenza Campagnolo & Fabio Eboli & Marinella Davide, 2016. "Can Paris deal boost SDGs achievement? An assesment of climate-sustainabilty co-benefits or side-effects," EcoMod2016 9635, EcoMod.
    7. Coxhead, Ian & Grainger, Corbett, 2018. "Fossil Fuel Subsidy Reform in the Developing World: Who Wins, Who Loses, and Why?," Staff Paper Series 589, University of Wisconsin, Agricultural and Applied Economics.
    8. Tri Purwaningsih, Vitriyani & Widodo, Tri, 2019. "Applying Tax Rate of 33,33% on Primary Energy in Indonesia," MPRA Paper 91315, University Library of Munich, Germany.

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