The Macroeconomic Impact of Europe’s Carbon Taxes

By Gilbert E. Metcalf, James H. Stock. Social Science Research Network, 2020

166 citations recorded by the source corpus.

We estimate the macroeconomic impacts of carbon taxes on GDP and employment growth rates using 30 years of data on carbon taxation in various European countries. We find no evidence for a negative impact on employment or GDP growth but rather find a zero to modest positive impact. We also find a cumulative emissions reduction on the order of 4 to 6 percent for a $40/ton CO2 tax covering 30 percent of emissions. Reductions would likely be greater for a broad-based US carbon tax since European carbon taxes typically do not cover those sectors with the lowest marginal abatement costs. (JEL E23, E24, H23, Q54, Q58)

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/adf67c1bdef0bd54996cbd032143b68d3c45b784