Arbeitspapier
Vertical fiscal externalities and the environment
We show that imposition of a state-level environmental tax in a federation crowds out preexisting federal taxes. We explain how this vertical fiscal externality can lead unilateral statelevel environmental policy to generate a welfare gain in the implementing state, at the expense of other states. Using a computable general equilibrium model of the Canadian federation, we show that vertical fiscal externalities can be the major determinant of the welfare change following environmental policy implementation by a state government. Our numerical simulations indicate that - as a consequence of vertical fiscal externalities - state governments can reduce greenhouse gas emissions by over 20 percent without any net cost to themselves.
- Language
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Englisch
- Bibliographic citation
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Series: Oldenburg Discussion Papers in Economics ; No. V-370-14
- Classification
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Wirtschaft
- Subject
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fiscal externality
climate policy
federalism
computable general equilibrium
- Event
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Geistige Schöpfung
- (who)
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Böhringer, Christoph
Rivers, Nicholas
Yonezawa, Hidemichi
- Event
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Veröffentlichung
- (who)
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University of Oldenburg, Department of Economics
- (where)
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Oldenburg
- (when)
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2014
- Handle
- Last update
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10.03.2025, 11:46 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Böhringer, Christoph
- Rivers, Nicholas
- Yonezawa, Hidemichi
- University of Oldenburg, Department of Economics
Time of origin
- 2014