April 2021

Recycling Carbon Tax Earnings to Maximize Welfare

Stephie Fried, Kevin Novan, William B. Peterman


This paper explores how to recycle carbon tax earnings back to households to maximize welfare. Using a general equilibrium lifecycle mannequin calibrated to evaluate the heterogeneity sms lån på minuttetin the U.S. economy, we secure the optimum coverage makes use of two thirds of carbon-tax earnings to diminish the distortionary tax on capital earnings while the remaining one third is weak to develop the progressivity of the labor-earnings tax. The optimum coverage attains elevated welfare and further equality than the lump-sum rebate manner most smartly-appreciated by policymakers in addition to the style at the foundation prescribed by economists–which referred to as exclusively for reductions in distortionary taxes.

Key phrases: Carbon tax; overlapping generations; earnings recycling

DOI: https://doi.org/10.17016/FEDS.2021.023

Full Paper

Abet to Top

Closing Update:
April 02, 2021

Leave a Reply

Your email address will not be published. Required fields are marked *