IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

Prepress Content: The following article is a preprint of a scientific paper that has completed the peer-review process and been accepted for publication within The Energy Journal.

While the International Association for Energy Economics (IAEE) makes every effort to ensure the veracity of the material and the accuracy of the data therein, IAEE is not responsible for the citing of this content until the article is actually printed in a final version of The Energy Journal. For example, preprinted articles are often moved from issue to issue affecting page numbers, and actual volume and issue numbers. Care should be given when citing Energy Journal preprint articles.

The Impact of a Revenue-Neutral Carbon Tax on GDP Dynamics: The Case of British Columbia

Abstract:
We study the impact over time of revenue-neutral-designed carbon taxes on GDP in the Canadian province of British Columbia (B.C.). The tax is broad-based, and all rate hikes and their timings were pre-announced. Our time series approach accounts for these pre-announcement effects, as well as for the possible saliency of the tax. Estimated impulse response functions and statistical comparisons of GDP dynamics in the presence and (counterfactual) absence of carbon taxes lead to the same result. Overall, revenue-neutral carbon taxation has no significant negative impacts on GDP. Our setup also allows us to examine the extent of the carbon tax pass-through into energy prices. We find that pass-through is complete. We conclude that implementing revenue-neutral carbon taxation contributes to lowering harmful greenhouse gases into the atmosphere without hurting the economy.

Download Executive Summary Purchase ( $25 )

Keywords: Environmental policies, carbon tax, GDP impacts, tax pass-through, vector autoregression

DOI: 10.5547/01956574.42.3.jber

References: Reference information is available for this article. Join IAEE, log in, or purchase the article to view reference data.

Published in Volume 42, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

© 2020 International Association for Energy Economics | Privacy Policy | Return Policy