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Friday Lunch Meeting, Mouez Fodha, September 21st 2018

21 September 2018 @ 12 h 30 min - 14 h 00 min

Mouez Fodha (PSE, Université Paris 1) will lecture about his soon published article: « Environmental Tax Reform under debt constraint »
This article analyzes the impacts of Environmental Tax Reform (ETR) when the government is constrained not to increase the public debt-to-output ratio.
We consider an overlapping generations model with pollution. Public spending for pollution abatement are …nanced by tax revenues and public debt. We show that keeping constant the public debt-output ratio is not an obstacle to attain a double dividend, i.e. an increase of both (i) environmental quality and (ii) aggregate consumption.
First, if the capital stock is low and the pollution abatement is large enough, a successful ETR consists in a rise of the environmental tax, compensated by a decrease of the income tax. Secondly, we show that the environmental tax revenues may help reduce the public debt-output ratio. We give conditions (on the initial level of the environmental tax and the debt-output ratio) such that an increase of the environmental tax, budget-balanced by a decrease of the debt-output ratio may also achieve a double dividend.
We conclude that public debt crisis should not compromise ETR, instead, environmental tax revenues could be part of the solution.
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Chaire Economie du Climat

Palais Brongniart, 28 Place de la bourse – 75 002 Paris

FLM- Salle du Séminaire – 4è étage (12.30 pm – 2 pm)


21 September 2018
12 h 30 - 14 h 00
Event Category:


Chaire Economie du Climat
01 73 01 93 42


Palais Brongniart (4e étage)
28 Place de la Bourse, Paris, 75002 France
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