Dynamic and Distributional Effects of Environmental Revenue Recycling Schemes: Simulations with a General Equilibrium Model of the Italian Economy

36 Pages Posted: 21 Mar 2002

See all articles by Roberto Roson

Roberto Roson

Ca Foscari University of Venice - Dipartimento di Economia; Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy; Loyola Andalucia University

Date Written: January 2002

Abstract

A dynamic general equilibrium model of the Italian economy is used to assess the impact of carbon taxation (or auctioned carbon permits), where additional revenue is used to cut either existing taxes on labour or on capital income. Simulation results do not support the existence of the so-called "double dividend" when labour taxes are reduced, whereas lower tax rates on capital have mild positive effects on growth and welfare, with progressivity properties on income distribution. These findings hinge on the assumptions of open economy, given world interest rate, and capital mobility.

Keywords: Applied general equilibrium models, double dividend, environmental taxation, Italy

Suggested Citation

Roson, Roberto, Dynamic and Distributional Effects of Environmental Revenue Recycling Schemes: Simulations with a General Equilibrium Model of the Italian Economy (January 2002). FEEM Working Paper No. 15.2002, Available at SSRN: https://ssrn.com/abstract=304342 or http://dx.doi.org/10.2139/ssrn.304342

Roberto Roson (Contact Author)

Ca Foscari University of Venice - Dipartimento di Economia ( email )

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Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy ( email )

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Loyola Andalucia University ( email )

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