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http://ssrn.com/abstract=830407
 
 

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Green Taxes and Double Dividends in a Dynamic Economy


Gerhard Glomm


Indiana University Bloomington - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Daiji Kawaguchi


Hitotsubashi University - Department of Economics

Facundo Sepulveda


University of Santiago, Chile

May 25, 2004

CAEPR Working Paper No. 2006-017

Abstract:     
This paper examines a revenue neutral green tax reform along the lines of the Double Dividend hypothesis. Using a dynamic general equilibrium model calibrated to the US economy, we find that increasing gasoline taxes and using the revenue to reduce capital income taxes does indeed deliver both types of welfare gains: from higher consumption of market goods (an efficiency dividend), and from a better environmental quality (a green dividend), even though in the new steady state environmental quality may worsen. We also find that, given the available evidence on how much households are willing to pay for improvements in air quality, the size of the green dividend is very small in absolute magnitude, and much smaller than the efficiency dividend.

Number of Pages in PDF File: 34

Keywords: Green taxes, Double Dividends, Capital Accumulation, Welfare

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Date posted: October 28, 2005  

Suggested Citation

Glomm, Gerhard and Kawaguchi, Daiji and Sepulveda, Facundo, Green Taxes and Double Dividends in a Dynamic Economy (May 25, 2004). CAEPR Working Paper No. 2006-017. Available at SSRN: http://ssrn.com/abstract=830407 or http://dx.doi.org/10.2139/ssrn.830407

Contact Information

Gerhard Glomm (Contact Author)
Indiana University Bloomington - Department of Economics ( email )
Bloomington, IN 47405-6620
United States
812-855-7256 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Daiji Kawaguchi
Hitotsubashi University - Department of Economics ( email )
Naka 2-1
Kunitachi, Tokyo 186-8601
Japan
Facundo Sepulveda
University of Santiago, Chile ( email )
Santiago
Chile
HOME PAGE: http://www.fsp.cl
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