We examine the economic impacts of using revenues from environmental taxation to reduce a pre-existing distortionary tax in multisector economy where regulation and apply heterogeneously across polluting sectors. With numerical framework including detailed sectoral disaggregation, we quantify these specific case European Union carbon pricing coexists with electricity levies employed support ren...

The paper presents a model of fiscal and monetary policy that evaluates the tradeoff be­ tween higher distortionary labor taxation and higher ination in the resolution of fiscal crises. In the model government debt is domestically held and nominal. Data are presented to show that such debt is now at least as important as external government debt in many key emerg­ ing markets, and that it is a...

This paper incorporates a distortionary tax into a microfoundations of money framework and revisits the optimum quantity of money. The money constraint in the decentralized market plays a key role in the optimal policy. Only if the constraint is binding can fiscal policy alter the agents’ surplus shares; monetary, but not fiscal, policy affects the agents’ bargaining position, leaving a special...

What is the impact of fiscal policy on the economy? How large are the “multipliers” of government spending and tax cuts? This old question has recently received considerable attention, in particular in the context of the American Recovery and Reinvestment Act (ARRA) of 2009. I contribute to answering that question by calculating fiscal multipliers in a baseline neoclassical growth model with en...

OBJECTIVE We examine the potential role for taxation in the tobacco endgame in New Zealand, where the goal is to become 'smokefree' (less than 5% smoking prevalence) by 2025. DESIGN Modelling study using a dynamic population model. SETTING AND PARTICIPANTS New Zealand, Māori and non-Māori men and women. INTERVENTIONS Annual increases in tobacco excise tax of 5%, 10%, 15% and 20% (with 10%...

a r t i c l e i n f o This paper concerns redistribution and public good provision under asymmetric information, which are here ingredients of a policy-problem facing each member state (nation) of an economic federation with decentralized leadership. Each member state is assumed to have its own redistributive policy and pattern of public consumption, whereas the federal level redistributes (ex-...

Taxes are usually called distortionary if they are not lump-sum (Ballard and Fullerton 1992). It is well known that if distortionary taxes are introduced in a formerly Pareto efficient perfectly competitive economy they induce an excess burden on the economy. But suppose, the economy is subject to pollution that renders the competitive allocation inefficient in the absence of any taxes. Then it...

The goal of this paper is to study optimal government policy when there is no way of committing to future policy and this restriction is binding. The paper has a methodological part and an applied part. The applied part analyzes the optimal choice of government expenditures when the financing of these expenditures involves distortionary taxation and has dynamic consequences—we are studying a si...

Most people accept that structural and labour market reforms are needed in Europe. However few have been undertaken. The usual conjecture is that reforms are costly in economic performance and costly to finance. Blanchard and Giavazzi (2003) and Spector (2004) develop a general equilibrium model with imperfect competition to show the impact of labour or product market deregulation. We extend th...