Arbeitspapier
Climate Policy and Optimal Public Debt
This paper analyzes the optimal level of public debt when taxes are used not only for funding public expenditures but also for correcting externalities from climate change. Taking into account externalities implies that the optimal policy deviates from tax smoothing. Provided cumulative marginal damages are larger from today’s than from tomorrow’s emissions, the internalization of externalities decreases [increases] optimal debt if tax rates are on the increasing [decreasing] side of the Laffer curve. The reversed holds if the cumulative marginal damages increase over time. Allowing for endogenous adaptation investments reduces the deviation from tax-smoothing, but nevertheless increases optimal debt.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 8865
- Klassifikation
-
Wirtschaft
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
National Debt; Debt Management; Sovereign Debt
Climate; Natural Disasters and Their Management; Global Warming
Environmental Economics: Government Policy
- Thema
-
environmental externality
public debt
tax smoothing
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Kellner, Maximilian
Runkel, Marco
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and Ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2021
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Kellner, Maximilian
- Runkel, Marco
- Center for Economic Studies and Ifo Institute (CESifo)
Entstanden
- 2021
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