Environmental tax reform and endogenous growth

A.L. Bovenberg, R.A. de Mooij

Research output: Working paperDiscussion paperOther research output

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Abstract

This paper explores the effects of an environmental tax reform on pollution, economic growth and welfare in an endogenous growth model with pre-existing tax distortions. We find that a shift in the tax mix away from output towards pollution may raise economic growth through two channels. The first channel is an environmental production externality, which determines the positive effect of lower aggregate pollution on the productivity of capital. The second channel is a shift in the tax burden away from the net return on investment towards profits. The paper also shows that, if tax shifting towards profits is large and environmental amenities are unimportant, the optimal tax on pollution may exceed its Pigovian level.
Original languageEnglish
PublisherUnknown Publisher
Volume1994-98
Publication statusPublished - 1994

Publication series

NameCentER Discussion Paper
Volume1994-98

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Endogenous growth
Pollution
Environmental tax reform
Economic growth
Profit
Tax burden
Environmental amenities
Production externalities
Tax shifting
Productivity
Endogenous growth model
Return on investment
Optimal tax
Economic welfare
Tax mix
Tax distortions

Keywords

  • Growth Models
  • Pollution
  • Tax Reform
  • Environmental Tax
  • environmental economics

Cite this

Bovenberg, A. L., & de Mooij, R. A. (1994). Environmental tax reform and endogenous growth. (CentER Discussion Paper; Vol. 1994-98). Unknown Publisher.
Bovenberg, A.L. ; de Mooij, R.A. / Environmental tax reform and endogenous growth. Unknown Publisher, 1994. (CentER Discussion Paper).
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Bovenberg, AL & de Mooij, RA 1994 'Environmental tax reform and endogenous growth' CentER Discussion Paper, vol. 1994-98, Unknown Publisher.

Environmental tax reform and endogenous growth. / Bovenberg, A.L.; de Mooij, R.A.

Unknown Publisher, 1994. (CentER Discussion Paper; Vol. 1994-98).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Environmental tax reform and endogenous growth

AU - Bovenberg, A.L.

AU - de Mooij, R.A.

N1 - Pagination: 23, [14]

PY - 1994

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N2 - This paper explores the effects of an environmental tax reform on pollution, economic growth and welfare in an endogenous growth model with pre-existing tax distortions. We find that a shift in the tax mix away from output towards pollution may raise economic growth through two channels. The first channel is an environmental production externality, which determines the positive effect of lower aggregate pollution on the productivity of capital. The second channel is a shift in the tax burden away from the net return on investment towards profits. The paper also shows that, if tax shifting towards profits is large and environmental amenities are unimportant, the optimal tax on pollution may exceed its Pigovian level.

AB - This paper explores the effects of an environmental tax reform on pollution, economic growth and welfare in an endogenous growth model with pre-existing tax distortions. We find that a shift in the tax mix away from output towards pollution may raise economic growth through two channels. The first channel is an environmental production externality, which determines the positive effect of lower aggregate pollution on the productivity of capital. The second channel is a shift in the tax burden away from the net return on investment towards profits. The paper also shows that, if tax shifting towards profits is large and environmental amenities are unimportant, the optimal tax on pollution may exceed its Pigovian level.

KW - Growth Models

KW - Pollution

KW - Tax Reform

KW - Environmental Tax

KW - environmental economics

M3 - Discussion paper

VL - 1994-98

T3 - CentER Discussion Paper

BT - Environmental tax reform and endogenous growth

PB - Unknown Publisher

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Bovenberg AL, de Mooij RA. Environmental tax reform and endogenous growth. Unknown Publisher. 1994. (CentER Discussion Paper).