Item Details

Environmental Taxation and the Double Dividend

Ruud A. de Mooij
Format
Book
Published
Amsterdam ; New York : Elsevier Science BV, 2000.
Edition
1st ed
Language
English
Series
Contributions to Economic Analysis
ISBN
0444504915
Contents
  • 2 A survey of the double-dividend literature 11
  • 2.1 Early literature 12
  • 2.1.1 Environmental tax reform 12
  • 2.1.2 Tax reform versus optimal tax 14
  • 2.1.3 Optimal second-best pollution taxes 15
  • 2.2 Recent literature 17
  • 2.2.1 Environmental tax reform 17
  • 2.2.2 Optimal environmental tax 19
  • 2.3 Tax-shifting 21
  • 2.3.1 Tax shifting between factors 22
  • 2.3.2 Tax shifting across countries 23
  • 2.3.3 Tax shifting between incomes 23
  • 2.4 Political-economy issues 24
  • 2.5 Interactions between dividends 27
  • 3 Environmental tax reform in the benchmark model 29
  • 3.1 Benchmark model 30
  • 3.1.1 Structure of the model 30
  • Firms 30
  • Households 31
  • Government 32
  • Environmental quality 33
  • International trade 33
  • 3.1.2 Linearization 34
  • 3.1.3 Welfare 37
  • Dividing the MEB into distortions 37
  • Dividing the MEB into dividends 39
  • 3.2 Environmental taxes on households 40
  • 3.2.1 Starting without initial environmental taxes 41
  • 3.2.2 Starting from positive environmental taxes 43
  • 3.2.3 Starting from a Pigovian tax 45
  • 3.3 Environmental taxes on firms 47
  • 3.3.1 Starting without initial environmental taxes 47
  • 3.3.2 Starting from positive environmental taxes 49
  • 3.3.3 Starting from a Pigovian tax 50
  • 3.4 Optimal environmental taxes 51
  • 3.5 Numerical simulations 54
  • 3.5.1 Calibration 54
  • 3.5.2 Simulation results 55
  • Appendix 3A Behavioral relations 57
  • Factor demand relations 57
  • Consumption and labor supply 57
  • Appendix 3B Marginal excess burden 59
  • Appendix 3C Analytical solution of the model 61
  • 4 Role of capital mobility and factor substitution 65
  • 4.1 Model with mobile capital in production 66
  • 4.1.1 Structure of the model 67
  • 4.1.2 Linearization 68
  • 4.1.3 Welfare 70
  • 4.2 Optimal taxation 72
  • 4.2.1 Unconstrained optimization 72
  • 4.2.2 Optimal tax with fixed capital or pollution tax 73
  • 4.2.3 Optimal tax with fixed labor tax 77
  • 4.3 Tax reform from labor to pollution taxes 81
  • 4.3.1 Starting from zero non-labor taxes 81
  • 4.3.2 Starting from a positive pollution tax 82
  • 4.3.3 Starting from a positive capital tax 83
  • 4.3.4 Starting from an arbitrary equilibrium 84
  • 4.4 Tax reform from capital to pollution taxes 85
  • 4.4.1 Starting from zero non-labor taxes 85
  • 4.4.2 Starting from a positive pollution tax 85
  • 4.4.3 Starting from a positive capital tax 87
  • 4.4.4 Starting from an arbitrary equilibrium 87
  • 4.5 Model with fixed capital in production 88
  • 4.5.1 Structure of the model 89
  • 4.5.2 Linearization 89
  • 4.5.3 Welfare 92
  • 4.6 Optimal taxation 92
  • 4.6.1 Unconstrained optimization 93
  • 4.6.2 Optimal tax with a fixed profit tax 94
  • Profits cannot bear the burden of taxation 95
  • Labor supplied infinitely elastically 96
  • General case 96
  • 4.6.3 Optimal tax system with fixed pollution tax 97
  • 4.6.4 Optimal tax system with fixed labor tax 97
  • 4.7 Tax reform from labor to pollution taxes 98
  • 4.7.1 Starting from a 100% profit tax 98
  • 4.7.2 Starting from a less than 100% profit tax 99
  • 4.8 Numerical simulations 102
  • 4.8.1 Calibration 103
  • 4.8.2 Model simulations with mobile capital 104
  • 4.8.3 Model simulations with fixed capital 106
  • Appendix 4A Optimal taxes in the model with mobile capital 109
  • Appendix 4B Tax reform in the model with mobile capital 111
  • Endogenous labor tax 112
  • Endogenous capital income tax 113
  • Appendix 4C Optimal taxes in the model with fixed capital 114
  • Appendix 4D Tax reform in the model with fixed capital 117
  • 5 Environmental taxes as trade-policy instruments 121
  • 5.1 Three-country model 123
  • 5.1.1 Structure of the model 123
  • Country 1 Home country 123
  • Country 2 Supplier of polluting inputs 125 --l Country 3 Rest of the world 126
  • International markets 126
  • Global environment 127
  • 5.1.2 Linearization 127
  • Price of polluting inputs 127
  • Price of intermediate inputs 129
  • Differences with the benchmark model 130
  • 5.1.3 Welfare 130
  • Welfare in the home country 130
  • Welfare in other countries 132
  • Global welfare 133
  • 5.2 Tax shifting to foreign suppliers of polluting inputs 134
  • 5.2.1 Optimal environmental tax 134
  • 5.2.2 Environmental tax reform 137
  • 5.2.3 Optimal tax from a global perspective 139
  • 5.3 Tax shifting to foreign users of intermediate inputs 141
  • 5.3.1 Optimal environmental tax 141
  • 5.3.2 Environmental tax reform 142
  • 5.3.3 Optimal tax from a global perspective 144
  • 5.4 Numerical simulations 146
  • 5.4.1 Endogenous energy price 147
  • An OECD-wide energy tax reform 148
  • An EU-wide energy tax reform 149
  • 5.4.2 Endogenous price of intermediate inputs 150
  • 6 Environmental taxes and distributional concerns 153
  • 6.1 Model with heterogeneous households 156
  • 6.1.1 Structure of the model 157
  • Modified household model 157
  • Aggregation 159
  • 6.1.2 Linearization 159
  • 6.1.3 Welfare 161
  • Distribution of welfare 161
  • A utilitarian measure for social welfare 163
  • Two options for revenue recycling 164
  • 6.2 Environmental tax reform 166
  • 6.2.1 Exogenous non-labor incomes 166
  • Higher non-labor incomes 167
  • Environmental tax reform 168
  • Utilitarian strong double dividend 169
  • Distributional consequences 169
  • 6.2.2 Indexation of non-labor incomes 170
  • Discussion on the weak double dividend 172
  • Revenue-raising vs. non-revenue-raising 173
  • 6.3 Numerical simulations 174
  • 6.3.1 Fixed nominal non-labor incomes 175
  • 6.3.2 Indexed real non-labor incomes 176
  • 7 Labor-market imperfections and the triple dividend 179
  • 7.1 Model with an imperfect labor market 182
  • 7.1.1 Structure of the model 182
  • Wage-bargaining process 183
  • Reservation wage 185
  • 7.1.2 Linearization 186
  • Factor demand 188
  • Value-added per worker 188
  • Wage rate 188
  • 7.1.3 Welfare 193
  • 7.2 Environmental tax reform 194
  • 7.2.1 Fixed consumer wages 196
  • Pink welfare 196
  • Green welfare 197
  • Blue welfare 198
  • Overall welfare 200
  • 7.2.2 Effects of labor taxes and labor productivity 200
  • Indexation to after-tax wages 201
  • Alternative indexation rules 202
  • 7.2.3 Perfectly competitive labor market 205
  • 7.2.4 Wage curve 208
  • 7.3 Numerical simulations 209
  • 7.3.1 Fixed consumer wages 209
  • 7.3.2 Indexation to after-tax wages 210
  • 7.3.3 Real wage resistance 210
  • 7.3.4 No indexation 212
  • 7.3.5 Wage curve 212
  • 7.3.6 Competitive labor market 213
  • 7.3.7 Results from other studies 214
  • 8 Feedback effects of the environment on the economy 219
  • 8.1 Production externalities 222
  • 8.1.1 Model 222
  • 8.1.2 Environmental tax reform 225
  • 8.1.3 Optimal environmental tax 227
  • 8.2 Non-separable consumption externalities 228
  • 8.2.1 Model 228
  • 8.2.2 Environmental tax reform 231
  • 8.2.3 Optimal environmental tax 232
  • 8.3 Numerical simulations 233
  • 8.3.1 Separable production externalities 233
  • 8.3.2 Non-separable consumption externalities 234
  • 9 Green tax reform in an endogenous growth model 237
  • 9.1 Model 238
  • 9.1.1 Structure of the model 239
  • Production function 239
  • Firm behavior 242
  • Household behavior 243
  • Government 244
  • Environmental quality 245
  • Walras law 245
  • 9.1.2 Linearization 246
  • 9.1.3 Welfare 249
  • 9.2 Effects on growth, pollution and welfare 251
  • 9.2.1 Effects on growth and environment 251
  • 9.2.2 Welfare effects 253
  • 9.2.3 Optimal pollution taxes 254
  • 9.3 Tax shifting 255
  • 9.3.1 Effects on growth and pollution 256
  • 9.3.22 Welfare effects 259
  • 9.4 Pollution permits 260
  • Appendix 9A Linearizing the factor-demand equations 265
  • Specification of F 265
  • Specification of M 265
  • Specification of N and Y 266
  • Linearizing marginal factor productivity 266
  • Linearizing factor-demand equations 267
  • Appendix 9B Welfare effects 268
  • Appendix 9C Solution of the model 270
  • Appendix 9D Pollution permits 272.
Description
xviii, 292 p. ; 24 cm.
Notes
Includes bibliographical references (p. [281]-292).
Series Statement
Contributions to economic analysis 246
Technical Details
  • Access in Virgo Classic

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    g| 2 t| A survey of the double-dividend literature g| 11 -- g| 2.1 t| Early literature g| 12 -- g| 2.1.1 t| Environmental tax reform g| 12 -- g| 2.1.2 t| Tax reform versus optimal tax g| 14 -- g| 2.1.3 t| Optimal second-best pollution taxes g| 15 -- g| 2.2 t| Recent literature g| 17 -- g| 2.2.1 t| Environmental tax reform g| 17 -- g| 2.2.2 t| Optimal environmental tax g| 19 -- g| 2.3 t| Tax-shifting g| 21 -- g| 2.3.1 t| Tax shifting between factors g| 22 -- g| 2.3.2 t| Tax shifting across countries g| 23 -- g| 2.3.3 t| Tax shifting between incomes g| 23 -- g| 2.4 t| Political-economy issues g| 24 -- g| 2.5 t| Interactions between dividends g| 27 -- g| 3 t| Environmental tax reform in the benchmark model g| 29 -- g| 3.1 t| Benchmark model g| 30 -- g| 3.1.1 t| Structure of the model g| 30 -- t| Firms g| 30 -- t| Households g| 31 -- t| Government g| 32 -- t| Environmental quality g| 33 -- t| International trade g| 33 -- g| 3.1.2 t| Linearization g| 34 -- g| 3.1.3 t| Welfare g| 37 -- t| Dividing the MEB into distortions g| 37 -- t| Dividing the MEB into dividends g| 39 -- g| 3.2 t| Environmental taxes on households g| 40 -- g| 3.2.1 t| Starting without initial environmental taxes g| 41 -- g| 3.2.2 t| Starting from positive environmental taxes g| 43 -- g| 3.2.3 t| Starting from a Pigovian tax g| 45 -- g| 3.3 t| Environmental taxes on firms g| 47 -- g| 3.3.1 t| Starting without initial environmental taxes g| 47 -- g| 3.3.2 t| Starting from positive environmental taxes g| 49 -- g| 3.3.3 t| Starting from a Pigovian tax g| 50 -- g| 3.4 t| Optimal environmental taxes g| 51 -- g| 3.5 t| Numerical simulations g| 54 -- g| 3.5.1 t| Calibration g| 54 -- g| 3.5.2 t| Simulation results g| 55 -- g| Appendix 3A t| Behavioral relations g| 57 -- t| Factor demand relations g| 57 -- t| Consumption and labor supply g| 57 -- g| Appendix 3B t| Marginal excess burden g| 59 -- g| Appendix 3C t| Analytical solution of the model g| 61 -- g| 4 t| Role of capital mobility and factor substitution g| 65 -- g| 4.1 t| Model with mobile capital in production g| 66 -- g| 4.1.1 t| Structure of the model g| 67 -- g| 4.1.2 t| Linearization g| 68 -- g| 4.1.3 t| Welfare g| 70 -- g| 4.2 t| Optimal taxation g| 72 -- g| 4.2.1 t| Unconstrained optimization g| 72 -- g| 4.2.2 t| Optimal tax with fixed capital or pollution tax g| 73 -- g| 4.2.3 t| Optimal tax with fixed labor tax g| 77 -- g| 4.3 t| Tax reform from labor to pollution taxes g| 81 -- g| 4.3.1 t| Starting from zero non-labor taxes g| 81 -- g| 4.3.2 t| Starting from a positive pollution tax g| 82 -- g| 4.3.3 t| Starting from a positive capital tax g| 83 -- g| 4.3.4 t| Starting from an arbitrary equilibrium g| 84 -- g| 4.4 t| Tax reform from capital to pollution taxes g| 85 -- g| 4.4.1 t| Starting from zero non-labor taxes g| 85 -- g| 4.4.2 t| Starting from a positive pollution tax g| 85 -- g| 4.4.3 t| Starting from a positive capital tax g| 87 -- g| 4.4.4 t| Starting from an arbitrary equilibrium g| 87 -- g| 4.5 t| Model with fixed capital in production g| 88 -- g| 4.5.1 t| Structure of the model g| 89 -- g| 4.5.2 t| Linearization g| 89 -- g| 4.5.3 t| Welfare g| 92 -- g| 4.6 t| Optimal taxation g| 92 -- g| 4.6.1 t| Unconstrained optimization g| 93 -- g| 4.6.2 t| Optimal tax with a fixed profit tax g| 94 -- t| Profits cannot bear the burden of taxation g| 95 -- t| Labor supplied infinitely elastically g| 96 -- t| General case g| 96 -- g| 4.6.3 t| Optimal tax system with fixed pollution tax g| 97 -- g| 4.6.4 t| Optimal tax system with fixed labor tax g| 97 -- g| 4.7 t| Tax reform from labor to pollution taxes g| 98 -- g| 4.7.1 t| Starting from a 100% profit tax g| 98 -- g| 4.7.2 t| Starting from a less than 100% profit tax g| 99 -- g| 4.8 t| Numerical simulations g| 102 -- g| 4.8.1 t| Calibration g| 103 -- g| 4.8.2 t| Model simulations with mobile capital g| 104 -- g| 4.8.3 t| Model simulations with fixed capital g| 106 -- g| Appendix 4A t| Optimal taxes in the model with mobile capital g| 109 -- g| Appendix 4B t| Tax reform in the model with mobile capital g| 111 -- t| Endogenous labor tax g| 112 -- t| Endogenous capital income tax g| 113 -- g| Appendix 4C t| Optimal taxes in the model with fixed capital g| 114 -- g| Appendix 4D t| Tax reform in the model with fixed capital g| 117 -- g| 5 t| Environmental taxes as trade-policy instruments g| 121 -- g| 5.1 t| Three-country model g| 123 -- g| 5.1.1 t| Structure of the model g| 123 -- g| Country 1 t| Home country g| 123 -- g| Country 2 t| Supplier of polluting inputs g| 125 --l g| Country 3 t| Rest of the world g| 126 -- t| International markets g| 126 -- t| Global environment g| 127 -- g| 5.1.2 t| Linearization g| 127 -- t| Price of polluting inputs g| 127 -- t| Price of intermediate inputs g| 129 -- t| Differences with the benchmark model g| 130 -- g| 5.1.3 t| Welfare g| 130 -- t| Welfare in the home country g| 130 -- t| Welfare in other countries g| 132 -- t| Global welfare g| 133 -- g| 5.2 t| Tax shifting to foreign suppliers of polluting inputs g| 134 -- g| 5.2.1 t| Optimal environmental tax g| 134 -- g| 5.2.2 t| Environmental tax reform g| 137 -- g| 5.2.3 t| Optimal tax from a global perspective g| 139 -- g| 5.3 t| Tax shifting to foreign users of intermediate inputs g| 141 -- g| 5.3.1 t| Optimal environmental tax g| 141 -- g| 5.3.2 t| Environmental tax reform g| 142 -- g| 5.3.3 t| Optimal tax from a global perspective g| 144 -- g| 5.4 t| Numerical simulations g| 146 -- g| 5.4.1 t| Endogenous energy price g| 147 -- t| An OECD-wide energy tax reform g| 148 -- t| An EU-wide energy tax reform g| 149 -- g| 5.4.2 t| Endogenous price of intermediate inputs g| 150 -- g| 6 t| Environmental taxes and distributional concerns g| 153 -- g| 6.1 t| Model with heterogeneous households g| 156 -- g| 6.1.1 t| Structure of the model g| 157 -- t| Modified household model g| 157 -- t| Aggregation g| 159 -- g| 6.1.2 t| Linearization g| 159 -- g| 6.1.3 t| Welfare g| 161 -- t| Distribution of welfare g| 161 -- t| A utilitarian measure for social welfare g| 163 -- t| Two options for revenue recycling g| 164 -- g| 6.2 t| Environmental tax reform g| 166 -- g| 6.2.1 t| Exogenous non-labor incomes g| 166 -- t| Higher non-labor incomes g| 167 -- t| Environmental tax reform g| 168 -- t| Utilitarian strong double dividend g| 169 -- t| Distributional consequences g| 169 -- g| 6.2.2 t| Indexation of non-labor incomes g| 170 -- t| Discussion on the weak double dividend g| 172 -- t| Revenue-raising vs. non-revenue-raising g| 173 -- g| 6.3 t| Numerical simulations g| 174 -- g| 6.3.1 t| Fixed nominal non-labor incomes g| 175 -- g| 6.3.2 t| Indexed real non-labor incomes g| 176 -- g| 7 t| Labor-market imperfections and the triple dividend g| 179 -- g| 7.1 t| Model with an imperfect labor market g| 182 -- g| 7.1.1 t| Structure of the model g| 182 -- t| Wage-bargaining process g| 183 -- t| Reservation wage g| 185 -- g| 7.1.2 t| Linearization g| 186 -- t| Factor demand g| 188 -- t| Value-added per worker g| 188 -- t| Wage rate g| 188 -- g| 7.1.3 t| Welfare g| 193 -- g| 7.2 t| Environmental tax reform g| 194 -- g| 7.2.1 t| Fixed consumer wages g| 196 -- t| Pink welfare g| 196 -- t| Green welfare g| 197 -- t| Blue welfare g| 198 -- t| Overall welfare g| 200 -- g| 7.2.2 t| Effects of labor taxes and labor productivity g| 200 -- t| Indexation to after-tax wages g| 201 -- t| Alternative indexation rules g| 202 -- g| 7.2.3 t| Perfectly competitive labor market g| 205 -- g| 7.2.4 t| Wage curve g| 208 -- g| 7.3 t| Numerical simulations g| 209 -- g| 7.3.1 t| Fixed consumer wages g| 209 -- g| 7.3.2 t| Indexation to after-tax wages g| 210 -- g| 7.3.3 t| Real wage resistance g| 210 -- g| 7.3.4 t| No indexation g| 212 -- g| 7.3.5 t| Wage curve g| 212 -- g| 7.3.6 t| Competitive labor market g| 213 -- g| 7.3.7 t| Results from other studies g| 214 -- g| 8 t| Feedback effects of the environment on the economy g| 219 -- g| 8.1 t| Production externalities g| 222 -- g| 8.1.1 t| Model g| 222 -- g| 8.1.2 t| Environmental tax reform g| 225 -- g| 8.1.3 t| Optimal environmental tax g| 227 -- g| 8.2 t| Non-separable consumption externalities g| 228 -- g| 8.2.1 t| Model g| 228 -- g| 8.2.2 t| Environmental tax reform g| 231 -- g| 8.2.3 t| Optimal environmental tax g| 232 -- g| 8.3 t| Numerical simulations g| 233 -- g| 8.3.1 t| Separable production externalities g| 233 -- g| 8.3.2 t| Non-separable consumption externalities g| 234 -- g| 9 t| Green tax reform in an endogenous growth model g| 237 -- g| 9.1 t| Model g| 238 -- g| 9.1.1 t| Structure of the model g| 239 -- t| Production function g| 239 -- t| Firm behavior g| 242 -- t| Household behavior g| 243 -- t| Government g| 244 -- t| Environmental quality g| 245 -- t| Walras law g| 245 -- g| 9.1.2 t| Linearization g| 246 -- g| 9.1.3 t| Welfare g| 249 -- g| 9.2 t| Effects on growth, pollution and welfare g| 251 -- g| 9.2.1 t| Effects on growth and environment g| 251 -- g| 9.2.2 t| Welfare effects g| 253 -- g| 9.2.3 t| Optimal pollution taxes g| 254 -- g| 9.3 t| Tax shifting g| 255 -- g| 9.3.1 t| Effects on growth and pollution g| 256 -- g| 9.3.22 t| Welfare effects g| 259 -- g| 9.4 t| Pollution permits g| 260 -- g| Appendix 9A t| Linearizing the factor-demand equations g| 265 -- t| Specification of F g| 265 -- t| Specification of M g| 265 -- t| Specification of N and Y g| 266 -- t| Linearizing marginal factor productivity g| 266 -- t| Linearizing factor-demand equations g| 267 -- g| Appendix 9B t| Welfare effects g| 268 -- g| Appendix 9C t| Solution of the model g| 270 -- g| Appendix 9D t| Pollution permits g| 272.
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