how do market reforms affect china s responsiveness to environmental policy a large percentage of total investment in china is allocated by the central government at below market interest rates in pursuit of non economic objectives this has resulted in low rates of return and a high number of non performing loans threatening the future health of the chinese economy as a result reform of capital markets is a high priority of the chinese government at the same time the country is implementing various environmental policies to deal with serious pollution issues in this paper we ask how reforms of the capital market will affect the functioning of a carbon tax this allows us to assess how china s willingness to join global efforts to reduce carbon emissions is influenced by china s current efforts to reduce investment subsidies we compare the costs of a carbon tax in a reformed economy with the costs of a carbon tax in the current subsidized economy we find that in the subsidized economy the tax interaction effect dampens the effect of a carbon tax resulting in smaller reductions in emissions than what would result in a reformed economy importantly we also find that the effect on economic welfare from a carbon tax is lower in the subsidized economy in fact for lower levels of reductions the carbon tax is actually welfare improving these results have important implications for an economy undergoing economic transition the carbon tax rate required to achieve a certain level of emission reductions will be higher in an economy with capital subsidies however the welfare implications of the tax indicate that the current system with capital subsidies is highly distorting implying that there is a high efficiency cost for the non economic objectives the government is pursuing by maintaining this system of subsidies

a uk carbon energy tax a carbon energy tax has been proposed by the european commission to start as us 3 per barrel oil equivalent in 1993 rising to us 10 in 2000 the effects of this tax on the uk economy can be assessed by using a large scale energy environment economy model in which energy demand is treated by means of aggregate equations for energy users and fuel share equations for electricity and each of the main fossil fuels the electricity supply industry is represented in the model by simulating the characteristics of each existing generating station and of a range of new station types and by allowing the model to choose the fuels used from relative fuel prices and prices of capital inputs this approach contrasts with the multimodel approach used in most studies of the effects of the tax the tax is introduced as a tax on imports and domestic output of fossil fuels in proportion to their carbon and energy content with the tax being passed on through the economic system depending on the use of the fuels thus the electricity industry is faced with higher prices for coal gas and fuel oil and chooses to burn the different fuels according to their relative prices four scenarios are developed which vary according to the way the tax revenues are recycled through reductions in vat or in income tax rates and whether the tax is introduced throughout the european community or throughout the oecd if the tax is european it is assumed that the energy intensive industries will be exempt the outcome is that the tax is sufficient to stabilize co2 emissions over the period 1990 2005 at 12 below base levels by the end of the period there is an overall saving of energy compared to base and a further switch to gas in electricity generation the effects on the macroeconomy are rather small and as the revenues are recycled rather than saved by the government gdp growth is likely to increase under the tax by some 0 2 above base this confirms other studies in which revenues are recycled but contradicts many results from studies in which revenue recycling is ignored or incomplete the effects on the energy intensive industries are expected to be small in all the scenarios but 14 of tax revenues are lost if the industries are exempt

efficient environmental taxation under worker firm bargaining we study an economy with free firm entry and unemployment due to firm worker bargaining over each firm s surplus and where firms cause pollution that can be reduced by initial investments an uncompensated increase in the pollution tax reduces pollution but increases unemployment implying a tradeoff between the two when tax revenues are used to subsidize either firms hiring or investments employment may also increase creating a double dividend from the pollution tax a pollution tax increase used to subsidize current employment is always less effective than a hiring subsidy and is totally ineffective when subsidies equal pollution tax revenues for each individual firm we show that the hypothetical pollution tax implementing the first best solution exceeds the pigouvian tax the second best tax exceeds this first best tax when we have a double dividend and is below it when we do not

commuting transport tax reform and the labour market employer paid parking and the relative efficiency of revenue recycling instruments in this paper the welfare effects of a budget neutral increase in taxes on car commuters are studied in a model that takes into account the presence of employer paid parking at the workplace it is found that the presence of employer paid parking substantially increases the welfare effect of such a tax reform independent of the use of the revenues congestion taxes not only correct congestion externalities they also reduce the inefficiency caused by employer paid parking moreover different congestion effects of alternative recycling instruments and the presence of employer paid parking jointly imply that recycling the tax revenues via higher public transport subsidies may yield much more favourable welfare effects than previously believed it can easily outperform recycling the tax revenues via lower labour taxes finally cashing out parking costs to public transport users is found to generate substantial positive welfare effects numerical analysis confirms the theory

is there a role for biofuels in promoting energy self sufficiency and security a cge analysis of biofuel policy in thailand given the rising price of crude oil some developing countries including thailand are looking towards developing their domestic renewable energy resources in particular biofuels however there are concerns about the possible adverse effects such a policy strategy would have on key variables such as sectoral output land allocation and the effects of prices particularly food prices this study develops a computable general equilibrium cge model of the thailand economy that features enhancements of the energy sector and uses it to analyze the government s recent renewable energy development plan this plan aims to increase domestic energy use from renewable sources to replace fossil fuel imports the study simulated specific policies contained in the plan among other things we found that promoting biofuel use causes a rapid increase in the price of biofuel and biofuel feedstock in the short run whereas these prices only increase slightly in the long run due to more elastic supplies the prices of food and other products marginally increase implying that food security is not undermined by the policy on the basis of the findings the study recommends a review of some of the targets because they were found to be rather high and a phasing in of others

green taxes can we protect the environment and improve the tax system at the same time on a cursory inspection public economics appears to provide a straightforward and compelling answer of yes to the question posed in the title to this paper as economists have long argued appropriately designed taxes can in principle at least efficiently restrain levels of polluting activities and in addition such taxes will generate revenues so that we can reduce rates on other forms of taxation that distort the functioning of the economy green taxes in short promise a double dividend they can both reduce excessive levels of pollution and increase the efficiency of the overall tax system at least so several economists have argued recently 17 20 but is this really so with the growing recognition of the enormous revenue potential of certain environmental taxes especially carbon taxes to address the problem of global warming public economists have returned to this question with a new round of research efforts directed both to understanding the properties of pollution taxes as revenue sources and to estimating their revenue potential and the magnitude of their effects on the economy and the newly emerging literature is producing some quite astonishing and very troubling findings in this paper i want to review this work and explore its implications when viewed in relation to some other research it appears to suggest that most forms of regulatory activity at least those that increase the costs of the regulated activities may have hitherto unappreciated costs of a stunning magnitude what many of us would have taken to be second order side effects of environmental and other regulatory policies can be of a magnitude that compromises to a significant extent their welfare enhancing properties having reviewed this body of work i wish also to explore some issues in the political economy of green taxes it is helpful to begin by briefly putting the issue in historical perspective

comment on m hoel emission taxes versus other environmental policies the choice of the appropriate instrument in environmental policy is not only a question of theoretical importance it is also of considerable political relevance while environmental taxes are sometimes used to control pollution quotas and direct controls dominate in practice if this observed bias is only due to the nature of policymaking and not supported by economic reasoning politicians are not well advised to use quotas and direct controls instead of environmental taxes hoel discusses popular arguments that are often used by politicians in favour of direct controls and concludes that the results are typically not clear cut in this comment i would like to focus on the employment effects of revenue raising and nonrevenue raising instruments politicians as well as special interest groups often claim that emission taxes increase the cost of production thereby harming employment clearly in the face of high rates of unemployment in many industrialized countries potentially negative employment effects of environmental regulation raise political resistance to green policy the ongoing debate has put

how robust is the uniform emissions pricing rule to social equity concerns abstract this paper examines pollution tax differentiation across industries in light of social equity concerns using theoretical and numerical general equilibrium analyses in an optimal tax framework we characterize the drivers for non uniform optimal taxes stemming from the interaction of household heterogeneity with social preferences quantitatively assessing the case of price based co2 emissions control in the u s economy we find that uniform emissions pricing is approximately optimal when social concerns are defined over inequity induced by the environmental tax the deviation from uniform emissions pricing however becomes non negligible when pollution tax rebates deviate much from optimal transfer schemes or when social concerns are defined over both policy induced impacts and inequity unrelated to environmental policy our results are robust to a number of model extensions including the stringency of the environmental target downstream vs upstream taxation pre existing distortionary taxes and parametric uncertainty in firms and households equilibrium tax responses

the economic and environmental impact of a carbon tax for scotland a computable general equilibrium analysis using a disaggregated energy economy environmental model we investigate the economic and environmental impact of a scottish specific carbon tax under three alternative assumptions about the use of the revenue raised by the tax revenues raised are not recycled within scotland revenues are used to increase general government expenditure or to reduce scottish income tax we find that by imposing a tax of 50 per tonne of co2 the 37 co2 reduction target is met with a very rapid adjustment in all three cases if the model incorporates forward looking behaviour however the adjustment is much slower if agents are myopic in addition the results of the model suggest that a carbon tax might simultaneously stimulate economic activity whilst reducing emissions and thus secure a double dividend but only for the case in which the revenue is recycled through income tax

how important are dual economy effects for aggregate productivity this paper brings together development accounting techniques and the dual economy model to address the role that factor markets have in creating variation in aggregate total factor productivity tfp development accounting research has shown that much of the variation in income across countries can be attributed to differences in tfp the dual economy model suggests that aggregate productivity is depressed by having too many factors allocated to low productivity work in agriculture data show large differences in marginal products of similar factors within many developing countries offering prima facie evidence of this misallocation using a simple two sector decomposition of the economy this article estimates the role of these misallocations in accounting for the cross country income distribution a key contribution is the ability to bring sector specific data on human and physical capital stocks to the analysis variation across countries in the degree of misallocation is shown to account for 30 40 of the variation in income per capita and up to 80 of the variation in aggregate tfp

effects of carbon taxes in an economy with prior tax distortions an intertemporal general equilibrium analysis abstract this paper analyzes the costs of carbon taxes in a model that recognizes interactions between this tax and pre existing taxes first we examine the extent to which costs of a u s carbon tax are reduced when its revenues finance cuts in income taxes such use of revenues significantly reduces but does not eliminate the overall policy costs the positive overall costs reflect the carbon tax s focus on intermediate inputs and its relatively narrow base in comparison with income taxes we also examine the sensitivity of the carbon tax s costs to the level of pre existing taxes for any given use of revenues welfare costs rise significantly with pre existing tax rates indicating that models disregarding pre existing taxes may substantially understate the costs of new environmental tax initiatives

optimal gasoline tax in developing oil producing countries the case of mexico this paper uses the methodology of parry and small 2005 to estimate the optimal gasoline tax for a less developed oil producing country the relevance of the estimation relies on the differences between less developed countries ldcs and industrial countries we argue that lawless roads general subsidies on gasoline poor mass transportation systems older vehicle fleets and unregulated city growth make the tax rates in ldcs differ substantially from the rates in the developed world we find that the optimal gasoline tax is 1 90 per gallon at 2011 prices and show that the estimate differences are in line with the factors hypothesized in contrast to the existing literature on industrial countries we show that the relative gasoline tax incidence may be progressive in mexico and more generally in ldcs

carbon pricing and energy efficiency improvement why to miss the interaction for developing economies an illustrative cge based application to the pakistan case abstract carbon energy taxes and energy efficiency improvement are studied well in the recent years for their potential adverse impacts on economy especially for lost production and international competitiveness and rebound effects however little attention has been paid to investigate them jointly which can not only prevent fall of energy services cost and thereby rebound effect but reduce the associated macroeconomic costs this study thus employs a 20 sector cge model to explore separately the impacts of carbon tax and its coordinated implementation with energy efficiency improvement on the pakistan economy the country underwent enormous pressure of energy security issues as well as climate change fallouts in the last couple of years and can be regarded as a suitable candidate for energy environmental conservation policies to be considered at a broader context with more concrete efforts the simulation results show that the impact of carbon tax on gdp is negative but resulting reductions in pollutant emissions are relatively high moreover the gdp is expected to grow comparatively positive when analyzed with improvements in energy efficiency with even higher decline in energy consumption demand and so emissions this simultaneous economic and environmental improvement would thus have positive implications regarding sustainable development of the country

will export rebate policy be effective for co2 emissions reduction in china a ceepa based analysis china has adopted cancellation of export tax rebate policies on many occasions to push ahead energy conservation and emission reduction since 2007 by applying a ceepa china energy environmental policy analysis system model this paper simulates the impacts of the cancellation of export rebates on co2 emissions and socio economic consequences in different scenarios so as to figure out whether it works this paper covers three export rebate scenarios and makes comparisons between the impacts of export rebates on emission reduction effects and that of carbon tax policies the conclusions are 1 the current policy which cancels export rebates for key sectors can cut emissions at huge economic cost yet it is unsustainable 2 the policy which cancels export rebates for key sectors and meanwhile subsidizes sectoral outputs yields double dividends in the short term thus can facilitate emission reduction yet the boost is limited 3 the policy which cancels export rebates and boosts domestic demand helps improving residents welfare in the short term while it may inflict pronounced social and economic impacts in the long run so policy of this kind should be adopted with great caution 4 export rebates generate far more economic costs than carbon tax policies in the long term and don t contribute to optimizing the energy mix as well as the latter in summary canceling export rebates should not be regarded as a priority to encourage emission reduction

when and where does foreign direct investment generate positive spillovers a meta analysis local firms may attract productivity spillovers from foreign investors yet these vary with local firms awareness capability and motivation to react to foreign entry in consequence spillovers vary across countries at different levels of economic development we apply competitive dynamics theory to analyze these contextual moderators of spillovers and test hypotheses thus derived in a meta analysis of the empirical literature on spillovers our analysis suggests a curvilinear relationship between spillovers and the host country s level of development in terms of income institutional framework and human capital

environmental policy and double dividend in a transitional economy abstract although the environmental benefit from implementing a climate tax is usually realized the economic dividend still remains a controversial issue warranting further research this is because the impact of an environmental policy on an economy wide system will depend on factors that differ from one region to the next in this paper we develop a static cge model for liberia that is capable of analyzing both a uniform and a partial carbon tax policy under the uniform policy instituted to ensure mitigation in the range of 20 50 an economic dividend is found for energy employment and welfare in particular energy consumption increases by between 5 and 15 5 respectively interestingly under a second best policy which exempts economically strategic sectors from the tax no economic dividend is found for all three variables this time energy use declines by between 2 and 9 these suggest that a uniform environmental tax policy is a more viable option for liberia in particular as it does not only generate economic dividend for employment and welfare it also incentivizes liberia s adoption and use of renewable energy technologies in general based on the results obtained further conditions for the feasibility of a double dividend are proposed

comparing real wage rates a real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys it provides an important indicator of the living standards of workers and also of the productivity of workers in this paper i set out the conceptual basis for such measures provide some historical examples and then provide my own preliminary analysis of a decade long project designed to measure the wages of workers doing the same job in over 60 countries workers at mcdonald s restaurants the results demonstrate that the wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1 and that these gaps declined over the period 2000 2007 but with much less progress since the great recession jel c81 c82 d24 j31 n30 o57

carbon taxation in russia prospects for a double dividend and improved energy efficiency russia is not only one of the world s major sources of carbon based energy coal oil and gas but is also one the most intensive users of energy furthermore russia accounts for a disproportionately large share of global carbon dioxide emissions some 5 to 6 of global carbon dioxide emissions eia 2011a it has been estimated world bank 2008 that russia could reduce its use of primary energy use by 45 with consequent economic and environmental benefits high energy and carbon intensity of the russia economy is inter alia explained by low energy prices due to high export taxes as well as administrative regulation of domestic prices of gas and electricity and low environmental taxes carbon taxes are one such pigouvian tax and they would address concerns on several fronts simultaneously in the short to medium term they would inter alia lead to lower ghg emissions and encourage the diffusion of more energy efficient technologies in the longer term the increased cost of energy inputs is expected to induce technological progress in this analysis the macroeconomic and sectoral effects of carbon taxes on the russia economy are examined this analysis addresses the following objectives i to test the double dividend hypothesis under perfect and imperfect competition in output markets to analyse ii the incidence of carbon taxes iii impacts on sectoral competitiveness iv effects on income equity and v interactions of carbon taxes with other taxes a computable single country multi sector comparative static cge model is employed russland verfugt nicht nur uber einen der grosten vorrate an kohlenstoffbasierter energie wie kohle rohol und gas sondern ist auch einer der grosten energieverbraucher daruber hinaus ist russland fur einen uberproportional grosen anteil von kohlendioxid emission etwa 5 bis 6 der weltweiten kohlendioxidemission verantwortlich mit der einfuhrung einer kohlendioxidsteuer konnten gleichzeitig unterschiedliche wirkungen erzielt werden kurz und mittelfristig wurden kohlenstoffsteuern sowohl zu einer reduzierung von treibhausgasemissionen als auch zur einfuhrung von energieeffizienteren technologien fuhren langfristig wird erwartet dass hohe energiekosten den anreiz zur entwicklung und zur investition in energiesparenden technischen fortschritt erhohen die vorliegende arbeit analysiert und bewertet die makrookonomischen und sektoralen auswirkungen einer einfuhrung von kohlenstoffsteuern auf die russische wirtschaft die ziele der arbeit bestehen darin die hypothese der doppelten dividende fur den fall des vollkommenen und des unvollkommenen wettbewerbs auf gutermarkten zu uberprufen und die inzidenz einer kohlenstoffsteuer ihre auswirkungen auf die sektorale wettbewerbsfahigkeit ihre auswirkungen auf die einkommensverteilung und die interaktion von kohlenstoffsteuern mit anderen steuern zu analysieren und zu bewerten als methodischer ansatz wurde ein single country und multi sektor model gewahlt

economic and welfare influences of an energy excise tax in jiangsu province of china a computable general equilibrium approach abstract in recent years although china s energy intensity has gradually decreased the total consumption of energy commodities has increased sharply levying an excise tax on energy commodities is one of the keys to control energy consumption this paper constructed a computable general equilibrium model to simulate levying an energy excise tax in jiangsu province which is one of china s strong economic provinces with lower endowments of energy resources the results show that the energy excise tax is beneficial for energy saving while levying energy will cause economic and welfare declines when at a level tax rate of 5 10 and 15 the loss of gdp will reach 0 27 0 66 and 1 13 respectively and the incomes of inhabitants and enterprises alike will decrease when the energy tax revenue used to compensate for the welfare losses suffered by inhabitants or enterprises there is a double dividend effect energy saving and increasing income moreover the simulation indicated that a 5 improvement of energy efficiency brings about a backfire phenomenon with an increase of 142 in energy consumption however when considering the cost of energy efficiency improvements the rebound effect will be significantly decreased policy suggestions are further recommended to help improve the energy policy in regard to reducing energy consumption

pollution taxes and revenue recycling abstract discussions of environmental policy and the tax system have emphasized the value of pollution tax revenues which can be used to reduce other tax distortions in the economy however by raising private marginal production costs environmental taxes also tend to reduce gdp and exacerbate the welfare costs of conventional taxes for environmental taxes in consumption goods industries the net welfare change from these two effects is negative unless this good is a relatively weak substitute for leisure an estimate for the optimal pollution tax with full revenue recycling is 63 to 78 of marginal environmental damages

economics and environmental implications of fuel efficiency improvement in malaysia a computable general equilibrium approach the continued increase in urbanization and vehicle ownership poses an increasing challenge in curbing the rising energy consumption and co2 emissions in malaysia for more than a decade road vehicles have been the leading contributor in the country due mainly to their heavy reliance on petroleum products particularly gasoline and diesel the efficient utilization of petroleum products becomes paramount in reducing malaysia s overall co2 emissions in the land transportation sector the timely abolition of petroleum product subsidies in 2014 may provide a financial source to support the improvement of petroleum product efficiency the primary purpose of this paper is to examine the impact on economic growth and sectoral performance with fuel subsidy savings being reallocated to the biofuel industry for research and development purposes the study then investigates whether an environmental tax on petroleum products could induce more energy saving and emission control this research applies the computable general equilibrium modeling for the simulation as it takes into account the interaction between petroleum products and the economy as a whole the malaysia input output tables 2010 is the main database used in the simulation the simulation results found that fuel efficiency improvement could produce a double dividend effect with simultaneous benefits on the economy and environmental quality a simultaneous implementation with fuel tax policy appears to be one suitable complementary measure for a further emission cut however sufficient compensation schemes might be necessary to stimulate economic activities over time based on the simulation results policymakers should emphasize fuel efficiency improvement as a crucial strategy to control the rising energy consumption and emissions in malaysia

multinational firms and technology transfer the authors construct an oligopoly model in which a multinational firm has a technology superior to those of local firms in the host country workers employed by the multinational acquire knowledge of the superior technology and can spread their knowledge to local firms by switching employers the multinational chooses to pay a wage premium to prevent local firms from hiring away its workers if the local firms are sufficiently disadvantaged or if there are enough local firms diffusion of the superior technology benefits local firms at the expense of workers whose wages suffer the host government might have an incentive to attract foreign direct investment even when technology transfer will not result because of the wage premium local employees of the multinational firm earn also foreign direct investment with technology transfer may reduce the total economic rent the host country earns

energy taxation and the double dividend effect in taiwan s energy conservation policy an empirical study using a computable general equilibrium model abstract faced with pressure from greenhouse gas reductions and energy price hikes the taiwan government is in the process of developing an energy tax regime to reflect environmental external costs and effectively curb energy consumption as well as mitigate co2 emissions through an adequate pricing system this study utilizes a cge model to simulate and analyze the economic impacts of the draft energy tax bill and its complementary fiscal measures under the assumption of tax revenue neutrality the use of energy tax revenue generated for the purpose of reducing income tax is the best choice with double dividend effects since it will effectively stimulate domestic consumption and investment and consequently mitigate the negative impacts of the distortionary tax regime the double dividend effect is less significant however when the supplementary measures being used are for government expenditure nevertheless all supplementary measures have effectively reduced energy consumption which means they have delivered at least the first dividend in the sense of co2 emissions control it has been verified in this study that having adequate public finance policy measures is the key to realizing the double dividend effect

the training and spread of managerial know how a comparative analysis of multinational and other firms in kenya abstract this article investigates an area of multinational corporate activity in less developed countries ldcs that has hithero gone unexplored namely their training of indigenous managers and the spread of this transferred know how throughout the host country economy the significance of management training for the successful transfer of technology is discussed in the introduction followed by a presentation of the methodology employed data regarding the extent and composition of management training offered to local managers is analyzed and conclusions regarding the extent and significance of management training by multinationals in ldcs are drawn

environmental levies and distortionary taxation pigou taxation and pollution i note an important distinction between the optimal price of environmental quality in a second best world and the optimal level of environmental quality using an analytical general equilibrium model i show that for reasonable parameter values an increase in tax distortions arising from an increase in required tax revenues leads to a fall in the optimal pigouvian tax rate even while environmental quality improves in general knowledge of the direction of changes in optimal environmental tax rates due to changes in the economy is not sufficient for understanding the impact on environmental quality 2003 elsevier science b v all rights reserved

structural change in developing countries has it decreased gender inequality summary this paper examines the evolution of female labor market outcomes from 1987 to 2008 by assessing the role of changing labor demand requirements in four developing countries brazil mexico india and thailand the results highlight the importance of structural change in reducing gender disparities by decreasing the labor demand for physical attributes the results show that india the country with the greatest physical labor requirements exhibits the largest labor market gender inequality in contrast brazil s labor requirements have followed a similar trend seen in the united states reducing gender inequality in both wages and labor force participation

when can carbon abatement policies increase welfare the fundamental role of distorted factor markets abstract this paper employs analytical and numerical models to assess the welfare effects of a revenue neutral carbon tax and nonauctioned carbon emissions permits taking into account preexisting tax distortions in factor markets the presence of preexisting taxes significantly raises the general equilibrium costs of both policies this cost increase is much greater under emissions permits since this policy does not generate revenues to reduce distortionary taxes under our central estimates emissions permits cannot increase welfare unless environmental damages exceed about 18 per ton of carbon in contrast an appropriately scaled carbon tax is welfare improving so long as environmental damages are positive

perspectives on multinational enterprises in emerging economies multinational enterprises mnes play a pivotal role in the development of many emerging economies in consequence they became the focus of scholarly research by economists and policy analysts in contrast international business scholars have been comparatively uninterested in analysing this role of mnes yet they could make important contributions to these debates first studies taking the individual firms as starting point would enhance understanding of the interaction between mnes and the local environment second theories and research methodologies developed in international business research could provide new insights into the dynamics of mnes in emerging economies the objective of this paper is to motivate more international business scholars to engage in research on positive and negative spillovers from foreign direct investment fdi in emerging economy societies to advance this research agenda scholars need to analyse the specific activities and capabilities of the firms involved and the impact of fdi on the broader social and environmental context for management this agenda raises the ethical question to what extent ought businesses to care about their local stakeholders

optimal dynamic carbon taxes in a climate economy model with distortionary fiscal policy how should carbon be taxed as a part of fiscal policy the literature on optimal carbon pricing often abstracts from other taxes however when governments raise revenues with distortionary taxes carbon levies have fiscal impacts while they raise revenues directly they may shrink the bases of other taxes e g by decreasing employment this article theoretically characterizes and then quantifies optimal carbon taxes in a dynamic general equilibrium climate economy model with distortionary fiscal policy first this article establishes a novel theoretical relationship between the optimal taxation of carbon and of capital income this link arises because carbon emissions destroy natural capital they accumulate in the atmosphere and decrease future output consequently this article shows how the standard logic against capital income taxes extends to distortions on environmental capital investments second this article characterizes optimal climate policy in sub optimal fiscal settings where income taxes are constrained to remain at their observed levels third this article presents a detailed calibration that builds on the seminal dice approach but adds features essential for a setting with distortionary taxes such as a differentiation between climate change production impacts e g on agriculture and direct utility impacts e g on biodiversity existence value the central quantitative finding is that optimal carbon tax schedules are 8 24 lower when there are distortionary taxes compared to the setting with lump sum taxes considered in the literature

optimal control of externalities in the presence of income taxation optimal control of externalities a substantial literature examines second best environmental policy focusing particularly on how the pigouvian directive that marginal taxes should equal marginal external harms needs to be modified in light of the preexisting distortion due to labor income taxation additional literature is motivated by the possibility that distributive concerns should amend the internalization prescription it is demonstrated however that simple first best rules unmodified for labor supply distortion or distribution are correct in a natural basic formulation of the problem specifically setting all commodity taxes equal to marginal harms and subsidies equal to marginal benefits can generate a pareto improvement likewise a marginal reform in the direction of the first best can yield a pareto improvement for other reforms a simple efficiency test characterizing when a pareto improvement is possible is offered qualifications and explanations for the substantial departure from results in previous work are also elaborated

energy taxes in the netherlands what are the dividends in this paper the environmental and economic effects of the introduction of a unilateral energy tax in the netherlands are analysed using an applied general equilibrium age model the effects of a small user energy tax and a general energy tax are compared while taking into account different tax recycling mechanisms the model contains a great level of detail with respect to emissions and environmental indicators greenhouse effect acidification eutrophication and waste which is helpful for assessing environmental quality the results show that the introduction of a small environmental tax reform not only improves the environment but also raises non environmental welfare which is due to an improvement of the efficiency of the tax structure

the efficiency value of effluent tax revenues the concept of the efficiency value of effluent tax revenues is developed it is defined as the reduction in excess burden resulting from the substitution of these revenues for current or future resource distorting tax revenues such as those raised from federal corporate and personal income taxes the annual efficiency value of revenues raised by national effluent taxes on two major air pollutants is estimated to range from 0 63 to 3 05 billion if substituted for federal personal income tax revenue and from 1 to 4 87 billion if substituted for corporate income tax revenue expressed in 1982 dollars thus previous estimates of the efficiency gain from substitution of an effluent tax scheme for current pollution regulation policy have been too low because the efficiency value of the tax revenues has been excluded

economic structure and factor payments there is a growing body of evidence that the labour payment share in national income varies across countries and over time suggesting that the popular aggregate cobb douglas production function may not capture income share dynamics there remains conflicting evidence on the importance of natural resource rents among low income economies and on estimates of the rate of return to produced capital this paper focuses on the structural differences among countries confirming the importance of the agriculture sector in estimates of labour and land s share of factor income based on 81 countries at diverse levels of economic development in the year 2005 i find that cross country data are best modelled by a ces production function with an elasticity of substitution of 0 8 and that many low income countries have a higher return to capital than the united states

foreign firms and chinese employment this paper examines the effect of foreign direct investment fdi on employment in the chinese manufacturing sector as one of the world s largest recipients of fdi china has arguably benefited from foreign multinational enterprises in various respects however one of the main challenges for china and other developing countries is job creation and the effect of fdi on employment is uncertain the effect depends on the amount of jobs created within foreign firms as well as the effect of fdi on employment in domestic firms we analyse fdi and employment in china using a large sample of manufacturing firms for the period 1998 2004 our results show that fdi has positive effects on employment growth the relatively high employment growth in foreign firms is associated with their firm characteristics and their high survival rate employment growth is also relatively high in private domestic chinese firms there also seems to be a positive indirect effect of fdi on employment in private domestically owned firms presumably caused by spillovers

preservation of trade secrets and multinational wage premia this paper considers the strategic behavior of a multinational rm with superiortechnologyoperatinginadevelopingcountry domestic rmsdonothaveaccesstothesuperior technology other than by hiring away multinational corporation mnc workers the mnc can retain its workers by paying a wage premia and wedetermine how the industry structure and the nature of strategic competitionbetween rms affects the mnc s incentive to pay this premia and thus preserveits informational advantage we characterize conditions under which mncsinef ciently divide job tasks in order to raise the cost to domestic rms ofacquiring the mnc s trade secrets jel f23 j31 o33

reevaluating the first and the second dividends of environmental tax reforms abstract there is increasing global interest in market based climate change policies following the last elections in the united states in this context an exxon mobil chief executive came out in favour of a carbon tax this paper is concerned with the welfare analysis of environmental tax reforms etr and takes up the claims for the need of an unambiguous and operative definition of the double dividend both for empirical purposes and political advisement in this paper we contest the usual definition of the second dividend and its assimilation to an efficiency dividend we propose alternative definitions by suggesting a different splitting of the total welfare variation between the first and the second dividend in order to isolate the efficiency effects of the etr the new definitions become clearly understandable and easy for economic and policy interpretation concepts like weak and strong double dividend turn out to be unnecessary finally we analyze etr for the us economy to illustrate the advantages of the proposed definitions for policy implementation