Pollution, capital mobility and tax policies with unemployment
Date
2008Source
Review of Development EconomicsVolume
12Pages
223-236Google Scholar check
Keyword(s):
Metadata
Show full item recordAbstract
In this paper we highlight aspects related to the links among unemployment, international capital mobility, and tax policies in a small open developing economy. Without international capital mobility, the joint optimal trade and environmental policies require a zero tariff and an emission tax lower than the Pigouvian tax. With international capital mobility and a capital tax (subsidy), the optimal emission tax rate is smaller (larger) compared to the rate when capital is untaxed. When both the emission tax and the capital tax/subsidy are jointly chosen optimally, then the optimal policy on capital is a lower subsidy, or even a tax, compared to the standard capital subsidy of the no pollution case. © Journal compilation © 2007 Blackwell Publishing Ltd.