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The Impact of a Carbon Tax on Economic Growth and Carbon Dioxide Emissions in Ireland. ESRI WP251. August 2008

Conefrey, Thomas and Fitz Gerald, John D. and Malaguzzi Valeri, Laura and Tol, Richard S.J. (2008) The Impact of a Carbon Tax on Economic Growth and Carbon Dioxide Emissions in Ireland. ESRI WP251. August 2008. [Working Paper]

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    Abstract

    This paper analyses the medium-term effects of a carbon tax on growth and CO2 emissions in Ireland, a small open economy. We find that a double dividend exists if the carbon tax revenue is recycled through reduced income taxes. If the revenue is recycled by giving a lump-sum transfer to households, a double dividend is unlikely. We also determine that a greater incidence of the carbon tax falls on capital than on labour. When combined with a decrease in income tax, there is a clear shift of the tax burden from labour to capital. Finally, most of the effect on the economy is due to changes in the competitiveness of the manufacturing and market services sectors. These results hold even if we allow changes in energy prices to have an enhanced (detrimental) effect on Ireland’s competitiveness.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > environmental policy (including international arena)
    Countries > Ireland
    EU policies and themes > Policies & related activities > economic and financial affairs > economic growth
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Economic and Social Research Institute (ESRI), Dublin > ESRI Working Papers
    Depositing User: Alyssa McDonald
    Official EU Document: No
    Language: English
    Date Deposited: 02 Dec 2017 18:04
    Number of Pages: 43
    Last Modified: 02 Dec 2017 18:04
    URI: http://aei.pitt.edu/id/eprint/87749

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