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Carbon taxes and Macroeconomic dynamics in Norway

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  • Anienwe, Prince
  • Bhattarai, Keshab

Abstract

This study investigates the long-term equilibrium relationships between Norway's carbon tax policy and key macroeconomic indicators using Johansen cointegration analysis and the Vector Error Correction Model (VECM). The findings show that Norway's carbon tax raises inflation and lowers investment over time, but does not impact GDP. These findings, based on cointegration and VECM analysis of carbon tax, GDP, investment, and inflation from 1995 to 2023, enhance understanding of how carbon taxes affect Norway's macroeconomy.

Suggested Citation

  • Anienwe, Prince & Bhattarai, Keshab, 2026. "Carbon taxes and Macroeconomic dynamics in Norway," MPRA Paper 127742, University Library of Munich, Germany, revised 12 Jan 2026.
    • Handle: RePEc:pra:mprapa:127742
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    File URL: https://mpra.ub.uni-muenchen.de/127742/1/MPRA_paper_127742.pdf
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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