Arbeitspapier
Why Finance Ministers Favor Carbon Taxes, Even if They Do not Take Climate Change into Account
Fiscal considerations may shift governmental priorities away from environmental concerns: Finance ministers face strong demand for public expenditures such as infrastructure investments but they are constrained by international tax competition. We develop a multi-region model of tax competition and resource extraction to assess the fiscal incentive of imposing a tax on carbon rather than on capital. We explicitly model international capital and resource markets, as well as intertemporal capital accumulation and resource extraction. While fossil resources give rise to scarcity rents, capital does not. With carbon taxes the rents can be captured and invested in infrastructure, which leads to higher welfare than under capital taxation. This result holds even without modeling environmental damages. It is robust under a variation of the behavioral assumptions of resource importers to coordinate their actions, and a resource exporter's ability to counteract carbon policies. Further, no green paradox occurs - instead, the carbon tax constitutes a viable green policy, since it postpones extraction and reduces cumulative emissions.
- Sprache
-
Englisch
- Erschienen in
-
Series: Nota di Lavoro ; No. 37.2015
- Klassifikation
-
Wirtschaft
International Investment; Long-term Capital Movements
Taxation and Subsidies: Efficiency; Optimal Taxation
Fiscal Policies and Behavior of Economic Agents: General
State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
Nonrenewable Resources and Conservation: Government Policy
- Thema
-
Carbon Pricing
Green Paradox
Infrastructure
Optimal Taxation
Strategic Instrument Choice
Supply-Side Dynamics
Tax Competition
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Franks, Max
Edenhofer, Ottmar
Lessmann, Kai
- Ereignis
-
Veröffentlichung
- (wer)
-
Fondazione Eni Enrico Mattei (FEEM)
- (wo)
-
Milano
- (wann)
-
2015
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Franks, Max
- Edenhofer, Ottmar
- Lessmann, Kai
- Fondazione Eni Enrico Mattei (FEEM)
Entstanden
- 2015
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