Abstract
The introduction of the European Community's carbon-energy tax in a small open economy is analyzed by comparing two kinds of revenue recycling. We use a dynamic general-equilibrium model with different regimes for the labor market, several income groups, and a crude valuation of environmental benefits. This allows for a more comprehensive empirical test of the double-dividend hypothesis, including equity aspects. It is shown that the weak double-dividend hypothesis can fail when equity aspects are taken into account.
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Proost, S., Van Regemorter, D. The double dividend and the role of inequality aversion and macroeconomic regimes. Int Tax Public Finan 2, 207–219 (1995). https://doi.org/10.1007/BF00877497
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DOI: https://doi.org/10.1007/BF00877497