The macroeconomic effects of climate policy: A Keynesian point of view
PILUSO, Nicolas
Centre d'Etude et de Recherche Travail Organisation Pouvoir [CERTOP]
Université Toulouse III - Paul Sabatier [UT3]
Centre d'Etude et de Recherche Travail Organisation Pouvoir [CERTOP]
Université Toulouse III - Paul Sabatier [UT3]
PILUSO, Nicolas
Centre d'Etude et de Recherche Travail Organisation Pouvoir [CERTOP]
Université Toulouse III - Paul Sabatier [UT3]
< Reduce
Centre d'Etude et de Recherche Travail Organisation Pouvoir [CERTOP]
Université Toulouse III - Paul Sabatier [UT3]
Language
en
Article de revue
This item was published in
Environmental Economics. 2022-09-14, vol. 13, n° 1, p. 16-27
Business Perspectives
English Abstract
The paper analyzes the effects of introducing a corporate carbon tax on GDP and the effectiveness of this macroeconomic policy. The study is based on constructing a simple Keynesian model with flexible prices. It shows ...Read more >
The paper analyzes the effects of introducing a corporate carbon tax on GDP and the effectiveness of this macroeconomic policy. The study is based on constructing a simple Keynesian model with flexible prices. It shows that the carbon tax can have a double beneficial effect on the economy in addition to its favorable effect on the environment: i.e., an increase in GDP and employment. The initial values (y = 100; C = 60; I = 18; G = 16; g(A) = 6) was used to simulate a positive shock of the carbon tax T, increasing from 1.75 to 1.9. The paper considers three different cases depending on the low (Case 1), medium (Case 2), or high (Case 3) sensitivity of the marginal propensity to consume in response to an increase in the prices of goods. In addition, case 4 is considered: stimulus policy associated with climate policy; and case 5 is: policy to increase nominal wages. The results show that the carbon tax can lead to an increase in prices. Although the tax does not excessively negatively affect consumption, it has a positive effect on GDP via the increase in green investments and the induced increase in public spending. Households are, therefore, not necessarily penalized because they benefit from the multiplier effects of the increase in public spending due to the introduction of the ecological tax. Furthermore, stimulus policy is even more effective when combined with an emissions tax.Read less <
English Keywords
pollution
carbon tax
inflation
fiscal policy
employment
GDP
Origin
Hal imported